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Part 3 Extraordinary Diligence of Common carriers ____________________________________________________ 3

Loadmasters Customs Services v. Glodel Brokerage Corporation and R&B Insurance January 10, 2011, G.R No.
179446 _________________________________________________________________________________ 3
Cesar Isaac v. A.L. Ammen Transportation Co., Inc. August 23, 1957 G.R No. L-9671 ____________________ 4
Jose Pilapil v. Hon. CA and Alatco Transportation Co. December 22, 1989 ____________________________ 4
Herminio Nocum v. Laguna Tayabas Bus Company G.R. No. L-23733 October 31, 1969 __________________ 4
Batangas Transportation Co. v. Gregorio Caguimbal et al. G.R. No. L-22985 January 24, 1968 _____________ 4
Loadmasters Customs Services v. Glodel Brokerage Corporation and R&B Insurance G.R. No. 179446 January
10, 2011 ________________________________________________________________________________ 5
Pedro Guzman v CA December 22, 1988 _______________________________________________________ 5
Estela Crisostomo v. CA and Caravan Travel & Tours, G.R. No. 138334, August 25, 2003 _________________ 5
American Home Assurance Co. v. The Court of Appeals, G.R. No. 94149, May 5, 1992 ___________________ 5
Amparo C. Servando, Claro Uy Bico v. Philippine Steam Navigation October 23, 1982 ___________________ 6
Vda. De Abeto v. Philippine Airlines, Inc. 115 SCRA 489 ___________________________________________ 8
R. Transport Corporation v. Pante September 15, 2009 ___________________________________________ 8
Asian Terminals, Inc. v. Simon Enterprise, Inc. G.R. No. 177116 February 27, 2013 ______________________ 8
3.1 LIABILITIES OF COMMON CARRIERS ___________________________________________________________ 8
> Victorino Cusi and Pilar Pobre v. Philippine National Railways, G.R. No. L-29889 May 31, 1979 __________ 8
> Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621, September 28, 1999) _______________ 15
Light Rail Transit Authority & Rodolfo Roman vs. Marjorie Navidad, G.R. No. 145804, 6 February 2003 ____ 15
Lita Enterprises, Inc. vs. Intermediate Appellate Court, G.R. No. L-64693, 27 April 1984) ________________ 15
(Victor Juaniza vs. Eugenio Jose, G.R. No.L-50127-28, 30 March 1979) ______________________________ 16
(Ma. Luisa Benedicto vs. Hon. Intermediate Appellate Court, G.R. No. 70876, 19 July 1990) _____________ 17
(Angel Jereos vs. Hon. Court of Appeals, G.R. No. L-48747, 30 September 1982) ______________________ 17
(Equitable Leasing Corporation vs. Lucita Suyom et al., G.R. No. 143360, 5 September 2002) ____________ 17
(William Tiu, doing business under the name and style of D Rough Riders, vs. Pedro A. Arriesgado, G.R. No.
138060, 1 September 2004)________________________________________________________________ 25
(Spouses Cesar & Suthira Zalamea vs. Court of Appeals, G.R. No. 104235 November 18, 1993) ___________ 30
(Singapore Airlines Limited vs. Fernandez, G.R. No. 142305, December 10, 2003) _____________________ 30
(Philippine Airlines, Inc., vs. Court of Appeals, G.R. No. 119641, May 17, 1996) _______________________ 36
(Philippine Airlines, Inc. vs. Court of Appeals, G.R. No. 120262, July 17, 1997) ________________________ 41
(Carlos Singson vs. Court of Appeals, G.R. No. 119995, November 18, 1997) _________________________ 42
(Cathay Pacific Airways, Ltd., vs. Spouses Daniel Vazquez And Maria Luisa Madrigal Vazquez, G.R. No. 150843,
March 14, 2003) _________________________________________________________________________ 42
(Philippine Airlines Inc. vs. Court of Appeals, G.R. No. 123238, September 22, 2008) ___________________ 42
The Heirs of the late Ruben Reinoso, Sr. vs. Court of Appeals, GR No. 116121, July 18, 2011 _____________ 42
Heirs of Josemaria Ochoa vs. G&S Transport Corporation, March 19, as affirmed in the July 16, 2012 decision42
3.2 VIGILANCE OVER GOODS __________________________________________________________________ 42
1. Exempting Causes _____________________________________________________________________ 42
1.1 Requirement of Absence of Negligence ___________________________________________________ 42
(Saturnino Bayasen vs. Court of Appeals, G.R. No.L-25785, 26 February 1981) ________________________ 42
(Alberta Yobido vs. Court of Appeals, G.R. No. 113003, 17 October 1997)____________________________ 42
(Bachelor Express, Incorporated vs. The Honorable Court of Appeals (Sixth Division), G.R. No. 85691, 31 July
1990) _________________________________________________________________________________ 42
(Sweet Lines, Inc. vs. The Honorable Court of Appeals, Micaela b. Quintos, et al., G.R. No. L-43640, 28 April
1983 __________________________________________________________________________________ 42
(Vicente Vergara vs. The Court of Appeals, G.R. No. 77679, 30 September 1987) ______________________ 42
(Mauro Ganzon vs. Court of Appeals, G.R. no. L-48757, 30 May 1988) ______________________________ 42
(Fortune Express, Inc. vs. Court of Appeals, G.R. No. 119756, 18 March 1999) ________________________ 42
(Pedro Vasquez, et al., vs. The Court of Appeals, G.R. No. L-42926, 13 September 1985) ________________ 42
(Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621, 28 September 1999) ________________ 42
(Smith Bell Dodwell Shipping Agency Corporation vs. Catalino Borja, G.R. No. 143008. June 10, 2002) _____ 42
3.3 LIABILITY OF SHIP OWNERS AND SHIPPING AGENTS _____________________________________________ 42
(Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation Ltd., 217 SCRA 359,
1993) _________________________________________________________________________________ 42
(Luzon Stevedoring Corporation vs. Court of Appeals, G.R. No. L-58897, 3 December 1987) _____________ 42
(Chua Yek Hong vs. Intermediate Appellate Court, G.R. No. 74811, 30 September 1988) ________________ 42
Dela Torre vs. Court of Appeals, GR No. 160088, July 13, 2011 ____________________________________ 42
Also read ______________________________________________________________________________ 42
3.4 Extra ordinary diligence in Carriage by Sea ____________________________________________________ 42
Seaworthiness __________________________________________________________________________ 42
Deviation ______________________________________________________________________________ 43
Negligence of Captain and Crew ____________________________________________________________ 43
Rules on passengers safety ________________________________________________________________ 43
Transshipment __________________________________________________________________________ 43
Part 4 Bill of Lading and Other Formalities ___________________________________________________________ 47
4.1 Concepts________________________________________________________________________________ 47
4.2 Definition _______________________________________________________________________________ 47
4.3 Kind of Bill of lading _______________________________________________________________________ 47
4.4 Nature of Bill of lading _____________________________________________________________________ 47
4.5 When effective ___________________________________________________________________________ 47
4.6 Bill of lading as Contract ___________________________________________________________________ 47
Parties ________________________________________________________________________________ 47
Contract of adhesion _____________________________________________________________________ 47
Parol evidence rule ______________________________________________________________________ 47
Bill of lading as evidence __________________________________________________________________ 47
Bill of lading as actionable document ________________________________________________________ 47
Shipment terms _________________________________________________________________________ 47
PART 5 ACTIONS AND DAMAGES IN CASE OF BREACH __________________________________________________ 47
5.1 Distinctions CULPA CONTRACTUAL V. CULPA AQUILIANA _______________________________________ 47
5.2 Concurrent causes of actions ________________________________________________________________ 47
Concurrence with 3rd persons ______________________________________________________________ 47
Solidary liability _________________________________________________________________________ 47
Alternative compensation scheme __________________________________________________________ 47
5.3 Notice of claim and prescriptive period ________________________________________________________ 47
Claim in overland Transportation and coastwise shipping ________________________________________ 47
Prescription in Overland Transportation and coastwise shipping ___________________________________ 47
Claim in International carriage of goods by sea_________________________________________________ 47
Prescription in International Carriage of goods _________________________________________________ 47
5.4 Recoverable Damages _____________________________________________________________________ 47
Actual or Compensatory Damages___________________________________________________________ 47
Attorneys fees __________________________________________________________________________ 47
Interest ________________________________________________________________________________ 47
Moral damages _________________________________________________________________________ 47
Nominal damages _______________________________________________________________________ 47
Temperate or moderate damages ___________________________________________________________ 47
Liquidated damages ______________________________________________________________________ 47
Exemplary or corrective damages ___________________________________________________________ 47
PART 6 MARITIME LAW __________________________________________________________________________ 48
Maritime law defined_________________________________________________________________________ 48
Real and Hypothecary Nature __________________________________________________________________ 48
Protest ____________________________________________________________________________________ 48
Admiralty jurisdiction _________________________________________________________________________ 48
Maritime pollution ___________________________________________________________________________ 48
Marine insurance ____________________________________________________________________________ 48
PART 7 VESSELS ________________________________________________________________________________ 48
PART 8 CHARTER PARTIES ________________________________________________________________________ 48
Definition __________________________________________________________________________________ 48
Different kinds of charter parties________________________________________________________________ 48
Bareboat charter ________________________________________________________________________ 48
Contract of affreightment _________________________________________________________________ 48
Effect of charter on character of carrier __________________________________________________________ 48
Persons who may make charter_________________________________________________________________ 48
Charterer ______________________________________________________________________________ 48
Part owners ____________________________________________________________________________ 48
Ship agents _____________________________________________________________________________ 48
Captain or master _______________________________________________________________________ 48
Requisites of a valid charter party _______________________________________________________________ 48
Freight ____________________________________________________________________________________ 48
Port of unloading ____________________________________________________________________________ 48
Demurrage _________________________________________________________________________________ 48
PART 9 LOANS ON BOTTOMRY AND RESPODENTIA ____________________________________________________ 48
PART 10 AVERAGES _____________________________________________________________________________ 48
PART 11 COLLISSIONS ___________________________________________________________________________ 48
PART 12 ARRIVAL UNDER STRESS AND SHIPWRECKS ___________________________________________________ 48
PART 13 SALVAGE ______________________________________________________________________________ 48
PART 14 - COGSA ________________________________________________________________________________ 48

Part 3 Extraordinary Diligence of Common carriers


I. RATIONALE

A common carrier is bound to carry the passengers safely as far a human care and foresight provide, using the utmost diligence of very
cautious persons, with due regard for all circumstances.

Extraordinary diligence: Calculated to protect the passengers from the tragic mishaps that frequently occur in connection with rapid modern
transportation.

II. HOW DUTY IS COMPLIED WITH

- There is no hard and fast rule in the exercise of extraordinary diligence

- Common carrier binds itself to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of a
very cautious person, with due regard for all the circumstances.

The duty even extends to the members of the crew or complement operating the carrier

1. Loadmasters Customs Services v. Glodel Brokerage Corporation


Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier. Glodel, in turn, engaged the services of
Loadmasters for the use of its delivery trucks to transport the cargoes to Columbias warehouses/plants. One (1) truck, loaded with 11
bundles or 232 pieces of copper cathodes, failed to deliver its cargo.

Issue: Who are liable

Held: Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned
tasks, even though the former are not engaged in any business or industry.

It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver and helper) were
instrumental in the hijacking or robbery of the shipment. As employer, Loadmasters should be made answerable for the damages caused by
its employees who acted within the scope of their assigned task of delivering the goods safely to the warehouse.

Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters would fully comply with the
undertaking to safely transport the subject cargo to the designated destination. Glodel should, therefore, be held liable with Loadmasters. Its
defense of force majeure is unavailing.
2. Cesar Isaac v. A.L. Ammen Transportation Co., Inc. August 23, 1957 G.R No. L-9671
Isaac boarded respondents bus and seated himself on the left side resting his left arm on the window sill but with his left elbow outside the
window. Before reaching his destination, a pick-up car at full speed and was running outside of its proper lane came from the opposite direction.
The driver of the bus swerved the bus to the very extreme right of the road until its front and rear wheels have gone over the pile of stones or
gravel situated on the rampart of the road. The bus could not bus farther right and run over a greater portion of the pile of gravel, the peak of
which was about 3 feet high, without endangering the safety of his passengers.

Despite efforts, the rear left side of the bus was hit by the pick-up car. He was rushed to a hospital where he was given blood transfusion to save
his life.

Issue: Was bus negligent?

Held: where a carrier's employee is confronted with a sudden emergency, the fact that he is obliged to act quickly and without a chance for
deliberation must be taken into account, and he is held to the some degree of care that he would otherwise be required to exercise in the absence
of such emergency but must exercise only such care as any ordinary prudent person would exercise under like circumstances and conditions, and
the failure on his part to exercise the best judgment the case renders possible does not establish lack of care and skill on his part

Considering all the circumstances, we are persuaded to conclude that the driver of the bus has done what a prudent man could have done to avoid
the collision

It is true that Isaac's contributory negligence cannot relieve A.L. Ammen of its liability but will only entitle it to a reduction of the amount of
damage caused (Article 1762, new Civil Code), but this is a circumstance which further militates against the position taken by Isaac.

3. Jose Pilapil v. Hon. CA and Alatco Transportation Co. December 22, 1989
A passenger was injured because a bystander outside the bus hurled a stone. Is the bus company liable?

No. There is no showing that any such incident previously happened so as to impose an obligation on the part of the personnel of the bus company
to warn the passengers and to take the necessary precaution. Such hurling of a stone constitutes fortuitous event in this case. The bus company is
not an insurer of the absolute safety of its passengers

4. Herminio Nocum v. Laguna Tayabas Bus Company

Facts: Appellee (Nocum), who was a passenger in Appellants Bus was injured as a consequence of the explosion of firecrackers, contained in a
box, loaded in said bus. A total of 37 passengers were injured. The bus conductor testified that the box belonged to a passenger whose name he
does not know and who told him that it contained miscellaneous items and clothes. He also said that from its appearance there was no indication
at all that the contents were explosives or firecrackers. Neither did he open the box because he just relied on the word of the owner. Dispatcher
Nicolas Cornista added that they were not authorized to open the baggages of passengers because instruction from the management was to call
the police if there were packages containing articles which were against regulations.

HELD: NO. We are not convinced that the exacting criterion of said provisions has not been met by appellant in the circumstances of this particular
case. Article 1755 provides: "A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the circumstances."

while it is true the passengers of appellant's bus should not be made to suffer for something over which they had no control, as enunciated in
the decision of this Court cited by His Honor, fairness demands that in measuring a common carrier's duty towards its passengers, allowance must
be given to the reliance that should be reposed on the sense of responsibility of all the passengers in regard to their common safety. It is to be
presumed that a passenger will not take with him anything dangerous to the lives and limbs of his co-passengers, not to speak of his own.

Not to be lightly considered must be the right to privacy to which each passenger is entitled. He cannot be subjected to any unusual search, when
he protests the innocuousness of his baggage and nothing appears to indicate the contrary, as in the case at bar. In other words, inquiry may be
verbally made as to the nature of a passenger's baggage when such is not outwardly perceptible, but beyond this, constitutional boundaries are
already in danger of being transgressed.

Since We hold that appellant has succeeded in rebutting the presumption of negligence by showing that it has exercised extraordinary diligence
for the safety of its passengers, "according to the circumstances of the (each) case", We deem it unnecessary to rule whether or not there was any
fortuitous event in this case.

5. Batangas Transportation Co. v. Gregorio Caguimbal


Deceased Pedro Caguimbal was a paying passenger of BTCO bus. Another bus was coming from the opposite direction (north-bound). Along the
national highway, on the date and hour above indicated, a horse-driven rig (calesa), which was then ahead of the Bian bus, was also coming from
the opposite direction. As to what transpired thereafter, the lower court chose to give more credence to defendant Batangas Transportation
Company's version which, in the words of the Court a quo, is as follows: "As the BTCO bus was nearing a house, a passenger requested the
conductor to stop as he was going to alight, and when he heard the signal of the conductor, the driver Tomas Perez slowed down his bus swerving
it farther to the right in order to stop; at this juncture, a calesa, then driven by Benito Makahiya was at a distance of several meters facing the
BTCO bus coming from the opposite direction; that at the same time the Bian bus was about 100 meters away likewise going northward and
following the direction of the calesa; that upon seeing the Bian bus the driver of the BTCO bus dimmed his light as established by Magno Ilaw, the
very conductor of the Bian bus at the time of the accident; that as the calesa and the BTCO bus were passing each other from the opposite
directions, the Bian bus following the calesa swerved to its left in an attempt to pass between the BTCO bus and the calesa; that without
diminishing its speed of about seventy (70) kilometers an hour, the Bian bus passed through the space between the BTCO bus and the calesa
hitting first the left side of the BTCO bus with the left front corner of its body and then bumped and struck the calesa which was completely
wrecked; that the driver was seriously injured and the horse was killed; that the second and all other posts supporting the top of the left side of
the BTCO bus were completely smashed and half of the back wall to the left was ripped open. (Exhibits 1 and 2). The BTCO bus suffered damages
for the repair of its damaged portion.

As a consequence of this occurrence, two (2) passengers of BTCO died, namely, Pedro Caguimbal and Guillermo Tolentino, apart from others who
were injured. The widow and children of Caguimbal instituted the present action, which was tried jointly with a similar action of the Tolentinos, to
recover damages from the Batangas Transportation Company, hereinafter referred to as BTCO. The latter, in turn, filed a third-party complaint
against the Bian Transportation Company hereinafter referred to as Bian and its driver, Marciano Ilagan. Subsequently, the Caguimbals
amended their complaint, to include therein, as defendants, said Bian and Ilagan.

Held:The recklessness of defendant was, manifest. As driver of the Bian bus, he overtook Benito Makahiya's horse-driven rig or calesa and passed
between the same and the BTCO bus despite the fact that the space available was not big enough therefor, in view of which the Bian bus hit the
left side of the BTCO bus and then the calesa. This notwithstanding, the Court of Appeals rendered judgment against the BTCO upon the ground
that its driver, Tomas Perez, had failed to exercise the "extraordinary diligence," required in Article 1733 of the new Civil Code, "in the vigilance for
the safety" of his passengers.

The record shows that, in order to permit one of them to disembark, Perez drove his BTCO bus partly to the right shoulder of the road and partly
on the asphalted portion thereof. Yet, he could have and should have seen to it had he exercised "extraordinary diligence" that his bus was
completely outside the asphalted portion of the road, and fully within the shoulder thereof, the width of which being more than sufficient to
accommodate the bus. He could have and should have done this, because, when the aforementioned passenger expressed his wish to alight from
the bus, Ilagan had seen the aforementioned "calesa", driven by Makahiya, a few meters away, coming from the opposite direction, with the Bian
bus about 100 meters behind the rig cruising at a good speed. 3 When Perez slowed down his BTCO bus to permit said passenger to disembark, he
must have known, therefore, that the Bian bus would overtake the calesa at about the time when the latter and BTCO bus would probably be on
the same line, on opposite sides of the asphalted portions of the road, and that the space between the BTCO bus and the "calesa" would not be
enough to allow the Bian bus to go through. It is true that the driver of the Bian bus should have slowed down or stopped, and, hence, was
reckless in not doing so; but, he had no especial obligations toward the passengers of the BTCO unlike Perez whose duty was to exercise "utmost"
or "extraordinary" diligence for their safety. Perez was thus under obligation to avoid a situation which would be hazardous for his passengers,
and, make their safety dependent upon the diligence of the Bian driver. Such obligation becomes more patent when we considered the fact of
which the Court may take judicial cognizance that our motor vehicle drivers, particularly those of public service utilities, have not distinguished
themselves for their concern over the safety, the comfort or the convenience of others.

6. Loadmasters Customs Services v. Glodel Brokerage Corporation (Duplicate)

7. Pedro Guzman v CA
Facts: Herein respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. Normally, after collection
respondent would bring such material to Manila for resale. He utilized (2) two six-wheelers trucks which he owned for the purpose. Upon
returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants to different establishments in Pangasisnan which
respondents charged a freight fee for.

Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinan contracted
with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers
along Marcos Highway. Hence, petitioners commenced an action against private respondent.

In his defense, respondent argued that he cannot be held liable due to force majuere, and that he is not a common carrier and hence is not
required to exercise extraordinary diligence.

Held: Not Force Majeure, Extraordinary diligence applies

8. Estela Crisostomo v. CA and Caravan Travel & Tours

9. American Home Assurance Co. v. The Court of Appeals, G.R. No. 94149, May 5, 1992
10. Amparo C. Servando, Claro Uy Bico v. Philippine Steam Navigation October 23, 1982

Servando v. Philippine Steam Navigation Co.


117 SCRA 832

Facts:
Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from
Manila to Pulupandan, Negros Occidental cargoes of cavans of rice and cartons of colored paper which were
evidenced by bills of lading.
Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and in good order, unto
the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was
razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico
was able to take delivery of 907 cavans of rice Appellees' claims for the value of said goods were rejected by
the appellant.

Issue:
Whether or not carrier is liable for the loss of the cargo.

Held:
The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of
Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred
before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant.
Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from
the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person who has a right to receive them, without
prejudice to the provisions of Article 1738. "
It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties
agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by
inserting therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless
such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage
caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . .
fire . ...

The Court sustains the validity of the above stipulation. There is nothing therein that is contrary to law,
morals or public policy. Therefore, the carrier is no longer liable for the loss of the goods.
Saludo, Jr. v. Court of Appeals
207 SCRA 498

Facts:
Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of plaintiffs
mother to Continental Mortuary Air Services which booked the shipment of the remains from Chicago to San
Francisco by Trans World Airways (TWA) and from San Francisco to Mania with Philippine Airlines (PAL). The
remains were taken to the Chicago Airport, but it turned out that there were 2 bodies in the said airport.
Somehow the 2 bodies were switched, and the remains of plaintiffs mother was shipped to Mexico instead.
The shipment was immediately loaded on another PAL flight and it arrived the day after the expected arrival.
Plaintiff filed a claim for damages in court. The lower court absolved both airlines and upon appeal it was
affirmed by the court.

Issue:
Whether or not the 2 airlines should be held liable for damages.

Held:
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and
effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the
right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the
goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when
the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier
for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has
thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we
agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier
instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact
have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been
unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the
carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under
Article 1735 be invoked.
As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the
cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as
agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that
date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway
Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them,
and subsequent events caused thereby, private respondents cannot be held liable
Macam v. Court of Appeals
313 SCRA 77

Facts:
Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is the
consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as consignee
and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the carrier directly to
GPC and not to Pakistan Bank and without surrendering the bill of lading.

Issue:
Whether or not there was a valid delivery.

Held:

The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to
the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party. However, in
the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his
demand letter to respondent and his complaint before the court. This premise brings into conclusion that the
deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore,
there was a valid delivery.

11. Vda. De Abeto v. Philippine Airlines, Inc. 115 SCRA 489

12. R. Transport Corporation v. Pante September 15, 2009

13. Asian Terminals, Inc. v. Simon Enterprise, Inc. G.R. No. 177116 February 27, 2013

3.1 LIABILITIES OF COMMON CARRIERS


14. Victorino Cusi and Pilar Pobre v. Philippine National Railways, G.R. No. L-29889 May 31, 1979

FIRST DIVISION

[ G.R. No. L-29889, May 31, 1979 ]

VICTORINO CUSI AND PILAR POBRE, PLAINTIFFS-APPELLEES, VS.


PHILIPPINE NATIONAL RAILWAYS, DEFENDANT-APPELLANT.

DECISION

GUERRERO, J.:
Direct appeal from the decision of the Court of First Instance of Rizal ordering
defendant-appellant to indemnify the plaintiffs-appellees in the total amount of Two
Hundred Thirty-Nine Thousand and Six Hundred Forty-Eight Pesos, and Seventy-Two
Centavos (P239,648.72) for injuries received in a collision caused by the gross
negligence of defendant-appellant, plus Ten Thousand Pesos (P10,000.00) as
attorney's fees and expenses of litigation.
Upon the amended and supplemental complaints for damages filed by
plaintiffs-appellees, the spouses Victorino Cusi and Pilar Pobrebefore the Court of First
Instance of Rizal against the Manila Railroad Company, now the Philippine National
Railways and duly answered by the latter and after due hearing, the following facts
appear as undisputed: On the night of October 5, 1963, plaintiffs-appellees attended a
birthday party inside the United Housing Subdivision in Paraaque, Rizal. After the
party which broke up at about 11 o'clock that evening, the
plaintiffs-appellees proceeded home in their Vauxhall car with Victorino Cusi at the
wheel. Upon reaching the railroad tracks, finding that the level crossing bar was raised
and seeing that there was no flashing red light, and hearing no whistle from any coming
train, Cusi merely slackened his speed and proceeded to cross the tracks. At the same
time, a train bound for Lucena traversed the crossing, resulting in a collision between
the two. The impact threw the plaintiffs-appellees out of their car which was
smashed. One Benjamin Franco, who came from the same party and was driving a
vehicle right behind them, rushed to their aid and brought them to San
Juan deDios Hospital for emergency treatment. Later, the plaintiffs-appellees were
transferred to the Philippine General Hospital. A week later, Mrs. Cusi transferred to
the Manila Doctors Hospital where Dr. Manuel Rivera, Head of the Orthopedic and
Fracture Service of the Philippine General Hospital, performed on her a second ope-
ration and continued to treat her until her discharge from the hospital on November 2,
1963. Thereafter, Dr. Rivera treated her as an out-patient until the end of February,
1964 although by that time the fractured bones had not yet healed. Mrs. Cusi was also
operated on by Dr. Franciso Aguilar, Director of the National Orthopedic Hospital, in
May, 1964 and in August, 1965, after another operation in her upper body from the
chest to the abdomen, she was placed in cast for some three (3) months and her right
arm immobilized by reason of the cast.
As enumerated in the Medical Certificate (Exh. "J"), Mrs. Cusi suffered the following:
"(1) Fracture open middle third humerus, right

(2) Fracture mandible right paramedian

(3) Fracture fibula left Distal

(4) Concussion, cerebral.

(5) Abrasions, multiple (face, head, lumbo-sacral and extremities)


(6) Lacerations (2) right temporal

(7) Contusions with hematoma left forehead and parieto occipital, right."

For these injuries, she underwent a total of four surgical operations in a period of two
years. As a result of the fracture on her right arm, there was a shortening of about 1 cm.
of that arm. She lost the flexibility of her wrist, elbow and shoulder. Up to the time she
took the witness stand in August, 1966, she still had an intermedullary nail in the bone
of her right arm. Likewise, Victorino Cusi suffered brain injuries which affected his
speech, memory, sense of hearing and neck movement. For a long period, he also felt
pain all over his body.
Victorino Cusi claimed that prior to the accident he was a successful businessman - the
Special Assistant to the Dolor Lopez Enterprises, the managing partner of Cusi and
Rivera Partnership, the manager of his ricemill, and with substantial investments in
other business enterprises. As a result of his injuries, he was unable to properly attend
to his various business undertakings. On the other hand, his wife, Pilar, was a skilled
music and piano teacher. After the accident, she lost the dexterity of her fingers forcing
her to quit her profession. She also bore ugly scars on several parts of her body, and
she suffered anxiety of a possible miscarriage being then five (5) months pregnant at
the time of the accident.
The defense is centered on the proposition that the gross negligence
of Victorino Cusi was the proximate cause of the collision; that had he made a full stop
before traversing the crossing as required by section 56(a) of Act 3992 (Motor Vehicle
Law), he could have seen and heard the approach of the train, and thus, there would
have been no collision.
After a protracted trial, the lower court rendered the decision now subject of the
appeal. Defendant-appellant seeks the reversal of said decision; but should We affirm
the same, that the award be reduced to a reasonable amount.
As the action is predicated on negligence, the New Civil Code[1] making clear that
"whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done," the crucial question posed in the petition at bar
is the existence of negligence on the part of defendant-appellant as found by the lower
court.
1. The question of negligence being one of fact, the lower court's finding of negligence
on the part of the defendant-appellant deserves serious consideration by the Court. It
commands great respect and weight, the reason being that the trial judge, having the
advantage of hearing the parties testify and of observing their demeanor on the witness
stand, is better situated to make conclusions of facts. Thus, it has been the standing
practice of appellate courts to accord lower court's judgments the presumption of
correctness. And unless it can be shown that error or errors, substantial in character,
be shown in the conclusion arrived at, or that there was abuse in judicial scrutiny, We
are bound by their judgments. On this ground alone We can rest the affirmance of the
judgment appealed from.[2]
2. Nor is the result different even if no such presumption were indulged in, that is, even
if We were to resolve whether or not there exist compelling reasons for an ultimate
reversal.
The judicial pronouncement below that the gross negligence of defendant-appellant
was the proximate cause of the collision has been thoroughly reviewed by this Court
and We fully affirm the same.
Negligence has been defined by Judge Cooley in his work on Torts (3d. ed.), sec.
1324[3] as "the failure to observe for the protection of the interests of another person
that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury." By such a test, it can readily be seen that
there is no hard and fast rule whereby such degree of care and vigilance is measured; it
is dependent upon the circumstances in which a person finds himself so situated. All
that the law requires is that it is always incumbent upon a person to use that care and
diligence expected of reasonable men under similar circumstances.
These are the circumstances attendant to the collision. Undisputably, the warning
devices installed at the railroad crossing ware manually operated; there were only 2
shifts of guards provided for the operation thereof - one, the 7:00 A.M. to 3:00 P.M.
shift, and the other, the 3:00 P.M. to 11:00 P.M. shift. On the night of the accident, the
train for Lucena was on an unscheduled trip after 11:00 P.M. During that precise hour,
the warning devices were not operating for no one attended to them. Also, as observed
by the lower court, the locomotive driver did not blow his whistle, thus: "xxx he simply
sped on without taking an extra precaution of blowing his whistle from a distance of 50
to 10 meters from the crossing. That the train was running at full speed is attested to by
the fact that notwithstanding the application of the emergency brakes, the train did not
stop until it reached a distance of around 100 meters."
These facts assessed together show the inadequacy, nay, the absence, of precautions
taken by the defendant-appellant to warn the travelling public of the impending
danger. It is clear to Us that as the signal devices were wholly manually-operated, there
was an urgent need for a flagman or guard to man the crossing at all times. As it was,
the crossing was left unattended to after eleven o'clock every night and on the night of
the accident. We cannot in all reason justify or condone the act of the
defendant-appellant allowing the subject locomotive to travel through the unattended
crossing with inoperative signal devices, but without sending any of its employees to
operate said signal devices so as to warn oncoming motorists of the approach of one of
its locomotives. It is not surprising therefore that the inoperation of the warning
devices created a situation which was misunderstood by the riding public to mean safe
passage. Jurisprudence recognizes that if warning devices are installed in railroad
crossings, the travelling public has the right to rely on such warning devices to put them
on their guard and take the necessary precautions before crossing the tracks. A need,
therefore, exists for the railroad company to use reasonable care to keep such devices in
good condition and in working order, or to give notice that they are not operating, since
if such a signal is misunderstood it is a menace.[4] Thus, it has been held that if a
railroad company maintains a signalling device at a crossing to give warning of the
approach of a train, the failure of the device to operate is generally held to be evidence
of negligence, which maybe considered with all the circumstances of the case in
determining whether the railroad company was negligent as a matter of fact.[5]
The set of circumstances surrounding the collision subject of this case is very much
similar to that of Liliusv. Manila Railroad Company, 59 Phil. 758 (1934), where this
Court upheld the lower court's finding of negligence on the part of defendant
locomotive company upon the following facts -
"x x x on the part of the defendant company, for not having had on that
occasion any semaphore at the crossing at Dayap, to serve as a warning to
passersby of its existence in order that they might take the necessary
precautions before crossing the railroad; and, on the part of its employees -
the flagman and switchman, for not having remained at his post at the
crossing in question to warn passersby of the approaching train; the station
master, for failure to send the said flagman and switchman to his post on
time; and the engineer, for not having taken the necessary precautions to
avoid an accident, in view of the absence of said flagman and switchman, by
slackening his speed and continuously ringing the bell and blowing the
whistle before arriving at the crossing."

Defendant-appellant rests its defense mainly on Section 56(a) of the Motor Vehicle
Law. Thus:
"Section 56(a) - Traversing through streets and railroad crossing, etc.- All
vehicles moving on the public highways shall be brought to a full stop
before traversing any 'through street' or railroad crossing. Whenever any
such 'through street' or crossing is so designated and signposted, it shall be
unlawful for the driver of any vehicle to fail to stop within twenty meters
but not less than two and one-half meters from such 'through street' or
railroad crossing."

The defense presupposes that the failure of plaintiffs-appellees to stop before


proceeding to traverse the crossing constitutes contributory negligence, thereby
precluding them from recovering indemnity for their injuries and damages.
The candor of defendant-appellant in interposing such a defense is doubtful. As
seemingly observed by the lower court, the defense, through inadvertence or
deliberateness, did not pursue further the excepting clause of the same section, thus to
go on:
"Provided, however, that the driver of a passenger automobile or
motorcycle may, instead of coming to a full stop, slow down to not more
than ten kilometers per hour whenever it is apparent that no hazard exists."

After a thorough perusal of the facts attendant to the case, this Court is in full accord
with the lower court. Plaintiff-appellee VictorinoCusi had exercised all the necessary
precautions required of him as to avoid injury to himself and to others. We find no
need for him to have made a full stop; relying on his faculties of sight and
hearing, Victorino Cusi had no reason to anticipate the impending danger. The record
shows that the spouses Cusi previously knew of the existence of the railroad crossing,
having stopped at the guardhouse to ask for directions before proceeding to the
party. At the crossing, they found the level bar raised, no warning lights flashing nor
warning bells ringing, nor whistle from an oncoming train. They safely traversed the
crossing. On their return home, the situation at the crossing did not in the least change,
except for the absence of the guard or flagman. Hence, on the same impression that the
crossing was safe for passage as before,
plaintiff-appellee Victorino Cusi merely slackened his speed and proceeded to cross the
tracks, driving at the proper rate of speed for going over railroad crossings. Had
defendant-appellant been successful in establishing that its locomotive driver blew his
whistle to warn motorists of his approach to compensate for the absence of the warning
signals, and that Victorino Cusi, instead of stopping or slackening his speed, proceeded
with reckless speed and regardless of possible or threatened danger, then We would
have been put in doubt as to the degree of prudence exercised by him and would have,
in all probability, declared him negligent,[6] But as the contrary was established, We
remain convinced that Victorino Cusi had not, through his own negligence, contributed
to the accident so as to deny him damages from the defendant-appellant.
The only question that now remains to be resolved is the reasonableness of the amount
awarded as damages to the plaintiffs-appellees.
The following actual expenses and losses are fully substantiated:
(a) Hospital bills of Mrs. Cusi from October, 1963 to May, 1964 in the
amount of Thirteen Thousand Five Hundred Fifty Pesos and Five Centavos
(P13,550.05);

(b) Another hospital bill of Mrs. Cusi in 1965 in the amount of


Three Thousand and One Pesos and Ninety Centavos (P3,001.90);
(c) Doctor's fees for two surgical operations performed on Mrs. Cusi by
one Dr. Manuel Rivera in the amount of One Thousand and Five Hundred
Pesos (P1,500.00);

(d) Loss of Victorino's wrist watch valued at Two Hundred and Fifty Pesos
(P250.00);

(e) Loss of Pilar's half of her pair of diamond earrings (1-1/2 carrats)
valued at Two Thousand Seven Hundred and Fifty Pesos (P2,750.00);

(f) Repair of the damaged Vauxhall car in the amount of Two Thousand
Eight Hundred and Ninety Four Pesos and Seventy-Seven Centavos
(p2,894.77).

The total award of actual damages in the amount of Twenty Three Thousand Nine
Hundred Forty-Six Pesos and Seventy-Two Centavos (P23,946.72) is, therefore,
correct.
The lower court awarded Twenty-One Thousand Six Hundred Pesos (P21,600.00) to
Mrs. Cusi for loss of income for the three years that she was under constant medical
treatment, and Fourteen Thousand Pesos (P14,000.00) for impairment of her earning
capacity; and Forty Thousand Pesos (P40,000.00) to Mr. Cusi for loss of income for the
eight months that he was disabled and impairment of his earning capacity. We find the
award reasonable. The records show that Mrs. Cusi, previously a skilled piano teacher
averaging a monthly income of Six Hundred Pesos (P600.00), cannot now teach nor
play the piano since the accident which resulted in the loss of the dexterity of her
fingers; likewise, Mr. Cusi cannot now vigorously attend to his businesses which
previously netted him a monthly average income of Five Thousand Pesos (P5,000.00).
As regards the award of Twenty Thousand Pesos (P20,000.00) for profits
which Victorino Cusi failed to realize from a certain real estate transaction with the
Dolor Lopez Enterprises, We affirm the same as the defendant-appellant has failed to
present an iota of evidence to overcome plaintiffs-appellees' evidence credited by the
lower court as to the certainty of the materialization of the stated transaction.
The award of Seventy Thousand Pesos (P70,000.00) to Mrs. Cusi and Fifty Thousand
Pesos (P50,000.00) to Victorino Cusi as moral damages is not excessive. In their own
respective fields of endeavor, both were successful. Now they have to bear throughout
their whole lifetime the humiliation wrought by their physical deformities which no
doubt affected, and will continue to do so, their social lives, their financial undertakings,
and even their mental attitudes.
Likewise, the amount of Ten Thousand Pesos (P10,000.00) given as attorney's fees,
and expenses of litigation is not unreasonable.
The total amount of damages awarded by the trial court should bear legal interest at 6%
from the rendition of the judgment, which was onMarch 26, 1968.
WHEREFORE, the judgment of the lower court is hereby AFFIRMED with the
modification that the total amount of damages shall bear legal interest at six per cent
(6%) from the rendition of the decision dated March 26, 1968.
SO ORDERED.

Teehankee, (Chairman), Makasiar, Fernandez, De


Castro, and Melencio-Herrera, JJ., concur.

15. Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621, September 28, 1999)
Light Rail Transit Authority & Rodolfo Roman vs. Marjorie Navidad, G.R. No. 145804, 6 February 2003

FACTS:

Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a token (representing payment of the
fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to
the area approached him. A misunderstanding or an altercation between the two apparently ensued that led to a fist
fight. No evidence, however, was adduced to indicate how the fight started or who, between the two, delivered the first
blow or how Navidad later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by
petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously.
The widow of Nicanor, Marjorie Navidad, along with her children, filed a complaint for damages against Junelito
Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of
her husband. Trial court ruled in favor Navidads wife and against the defendants Prudent Security and Junelito Escartin
. LRTA and Rodolfo Roman were dismissed for lack of merit. CA held LRTA and Roman liable, hence the petition.

ISSUE:

Whether or not there was a perfected contract of carriage between Navidad and LRTA

HELD:

AFFIRMED with MODIFICATION but only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo
Roman is absolved from liability

Contract of carriage was deemed created from the moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and protection under a contractual relation. The appellate court
had correctly held LRTA and Roman liable for the death of Navidad in failing to exercise

16. Lita Enterprises, Inc. vs. Intermediate Appellate Court, G.R. No. L-64693, 27 April 1984)

FACTS:

Ocampo and Garcia purchased in installment from the Delta Motor Sales Corporation 5 Toyota Corona Standard cars
to be used as taxicabs; they had no franchise to operatetaxicabs, so they contracted with Lita Enterprises for the use of
the latters certificate of public convenience in consideration of an initial payment of 1,000.00 and a monthly rentalof
200.00 per taxicab unit; the aforesaid cars were then registered in the name of LitaEnterprises

one of the taxicabs driven by Ocampo and Garcias employee, Emeterio Martin, collidedwith a motorcycle whose driver,
Florante Galvez, died from the head injuries sustainedtherefrom

a criminal case was filed against the driver Martin, while a civil case for damages wasinstituted by heir of the victim
against Lita Enterprises

ISSUE:

WON Lita Enterprises is liable to the heir of the victim who died as a result of
thegross negligence of Ocampo and Garcias driver while driving one private respondentstaxicabs

HELD:

Yes.

kabit system

system whereby a person who has been granted a certificate of convenience allows another person who owns motors
vehicles to operate under suchfranchise for a fee; contrary to public policy and, therefore, void and inexistent
underArticle 1409 of the Civil Code; as a result, the court will not aid either party to enforce anillegal contract, but will
leave them both where it finds them (pari delicto rule)

Art. 1412: If the act in which the unlawful or forbidden cause consists does not constitutea criminal offense, the
following rules shall be observed; (1) when the fault, is on the
partof both contracting parties, neither may recover what he has given by virtue of thecontract, or demand
the performance of the others undertaking.

the defect of inexistence of a contract is permanent and incurable, and cannot be cured byratification or by prescription

17. (Victor Juaniza vs. Eugenio Jose, G.R. No.L-50127-28, 30 March 1979)

Eugenio Jose, a registered owner and operator of the passenger jeepney involved in an accident of collision with a
freight train of the PNR that took place in November 1969 resulted in the 7 deaths and 5 physical injuries of its
passengers. That time, Eugenio was married to Socorro but had been cohabiting with Rosalia Arroyo,
defendant-appellant for 16 years as husband and wife. Trial court decision rendered them jointly and severally liable
to pay damages to the heir of the deceased, Victor Juaniza. A motion was prayed for by Rosalia for the decision to be
reconsidered.

ISSUE: WON Eugenio and Rosalia are co-owners of the jeepney.

HELD:

The co-ownership provided in Article 147 applied only when the parties are not incapacitated to marry. Hence, the
jeepney belongs to the conjugal partnership with the lawful wife. The common-law wife not being the registered
owner cannot be held liable for the damages caused by its operation. There is therefore no basis for her liability in the
damages arising from the death of and physical injuries suffered by the passengers.

18. (Ma. Luisa Benedicto vs. Hon. Intermediate Appellate Court, G.R. No. 70876, 19 July 1990)

FACTS:

Greenhills Wood Industries - bound itself to sell and deliver to Blue Star Mahogany, Inc.100,000 board feet of sawn
lumber with the understanding that an initial delivery would bemade.

Greenhills resident manager in Maddela, Dominador Cruz, contracted Virgilio Licuden, thedriver of a cargo
truck, to transport its sawn lumber to the consignee Blue Star inValenzuela, Bulacan; this cargo truck was registered in
the name of Ma. Luisa Benedicto,the proprietor of Macoven Trucking, a business enterprise engaged in hauling freight
the Manager of Blue Star called up Greenhills president informing him that the sawnlumber on board the subject cargo
truck had not yet arrived in Valenzuela, Bulacan;because of the delay in delivery Blue Star was constrained to look
for other suppliers Greenhills filed criminal case against driver Licuden for estafa; and a civil case forrecovery of the
value of the lost sawn lumber plus damages against Benedicto

Benedicto denied liability as she was a complete stranger to the contract of carriage, thesubject truck having been
earlier sold by her to Benjamin Tee; but the truck had remainedregistered in her name because Tee have not yet fully
paid the amount of the truck; bethat as it may, Tee had been operating the said truck in Central Luzon from that
andLicuden was Tees employee and not hers

ISSUE:

WON Benedicto, being the registered owner of the carrier, should be held liable forthe value of the undelivered or lost
sawn lumber

HELD:

Yes. The registered owner liable for consequences flowing from the operations of thecarrier, even though the specific
vehicle involved may already have been transferred to another person. This doctrine rests upon the principle that in
dealing with vehiclesregistered under the Public Service Law, the public has the right to assume that theregistered
owner is the actual or lawful owner thereof It would be very difficult and oftenimpossible as a practical matter, for
members of the general public to enforce the rights of action that they may have for injuries inflicted by the vehicles
being negligently operated if they should be required to prove who the actual owner is. Greenhills is not required to
gobeyond the vehicles certificate of registration to ascertain the owner of the carrier

19. (Angel Jereos vs. Hon. Court of Appeals, G.R. No. L-48747, 30 September 1982)
20. (Equitable Leasing Corporation vs. Lucita Suyom et al., G.R. No. 143360, 5 September 2002)

THIRD DIVISION

[G.R. No. 143360. September 5, 2002]


EQUITABLE LEASING CORPORATION, petitioner, vs. LUCITA SUYOM, MARISSA
ENANO, MYRNA TAMAYO and FELIX OLEDAN, respondents.

DECISION
PANGANIBAN, J.:

In an action based on quasi delict, the registered owner of a motor vehicle is solidarily liable for
the injuries and damages caused by the negligence of the driver, in spite of the fact that the vehicle
may have already been the subject of an unregistered Deed of Sale in favor of another person. Unless
registered with the Land Transportation Office, the sale -- while valid and binding between the parties
-- does not affect third parties, especially the victims of accidents involving the said transport
equipment. Thus, in the present case, petitioner, which is the registered owner, is liable for the acts of
the driver employed by its former lessee who has become the owner of that vehicle by virtue of an
unregistered Deed of Sale.

Statement of the Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the May 12, 2000
Decision[1] of the Court of Appeals[2] (CA) in CA-GR CV No. 55474. The decretal portion of the Decision
reads as follows:

WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit.
The assailed decision, dated May 5, 1997, of the Regional Trial Court of Manila, Branch 14, in
Civil Case No. 95-73522, is hereby AFFIRMED with MODIFICATION that the award of
attorneys fees is DELETED. [3]

On the other hand, in Civil Case No. 95-73522, the Regional Trial Court (RTC) of Manila (Branch
14) had earlier disposed in this wise:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant
Equitable Leasing Corporation ordering said defendant to pay to the plaintiffs the following:

A. TO MYRNA TAMAYO

1. the sum of P50,000.00 for the death of Reniel Tamayo;

2. P50,000.00 as moral damages; and

3. P56,000.00 for the damage to the store and its contents, and funeral expenses.

B. TO FELIX OLEDAN

1. the sum of P50,000.00 for the death of Felmarie Oledan;

2. P50,000.00 as moral damages; and


3. P30,000.00 for medical expenses, and funeral expenses.

C. TO MARISSA ENANO

1. P7,000.00 as actual damages

D. TO LUCITA SUYOM

1. The sum of P5,000.00 for the medical treatment of her two sons.

The sum of P120,000.00 as and for attorneys fees. [4]

The Facts

On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the house cum store of
Myrna Tamayo located at Pier 18, Vitas, Tondo, Manila. A portion of the house was destroyed. Pinned
to death under the engine of the tractor were Respondent Myrna Tamayos son, Reniel Tamayo, and
Respondent Felix Oledans daughter, Felmarie Oledan. Injured were Respondent Oledan himself,
Respondent Marissa Enano, and two sons of Respondent Lucita Suyom.
Tutor was charged with and later convicted of reckless imprudence resulting in multiple homicide
and multiple physical injuries in Criminal Case No. 296094-SA, Metropolitan Trial Court of Manila,
Branch 12.[5]
Upon verification with the Land Transportation Office, respondents were furnished a copy of
Official Receipt No. 62204139[6] and Certificate of Registration No. 08262797,[7] showing that the
registered owner of the tractor was Equitable Leasing Corporation/leased to Edwin Lim. On April 15,
1995, respondents filed against Raul Tutor, Ecatine Corporation (Ecatine) and Equitable Leasing
Corporation (Equitable) a Complaint[8] for damages docketed as Civil Case No. 95-73522 in the RTC
of Manila, Branch 14.
The trial court, upon motion of plaintiffs counsel, issued an Order dropping Raul Tutor, Ecatine
and Edwin Lim from the Complaint, because they could not be located and served with
summonses.[9] On the other hand, in its Answer with Counterclaim,[10] petitioner alleged that the vehicle
had already been sold to Ecatine and that the former was no longer in possession and control thereof
at the time of the incident.It also claimed that Tutor was an employee, not of Equitable, but of Ecatine.
After trial on the merits, the RTC rendered its Decision ordering petitioner to pay actual and moral
damages and attorneys fees to respondents. It held that since the Deed of Sale between petitioner
and Ecatine had not been registered with the Land Transportation Office (LTO), the legal owner was
still Equitable.[11] Thus, petitioner was liable to respondents.[12]

Ruling of the Court of Appeals

Sustaining the RTC, the CA held that petitioner was still to be legally deemed the owner/operator
of the tractor, even if that vehicle had been the subject of a Deed of Sale in favor of Ecatine on
December 9, 1992. The reason cited by the CA was that the Certificate of Registration on file with the
LTO still remained in petitioners name.[13] In order that a transfer of ownership of a motor vehicle can
bind third persons, it must be duly recorded in the LTO.[14]
The CA likewise upheld respondents claim for moral damages against petitioner because the
appellate court considered Tutor, the driver of the tractor, to be an agent of the registered
owner/operator.[15]
Hence, this Petition.[16]

Issues

In its Memorandum, petitioner raises the following issues for the Courts consideration:
I

Whether or not the Court of Appeals and the trial court gravely erred when they decided and held
that petitioner [was] liable for damages suffered by private respondents in an action based on quasi
delict for the negligent acts of a driver who [was] not the employee of the petitioner.

II

Whether or not the Court of Appeals and the trial court gravely erred when they awarded moral
damages to private respondents despite their failure to prove that the injuries they suffered were
brought by petitioners wrongful act. [17]

This Courts Ruling

The Petition has no merit.

First Issue:
Liability for Wrongful Acts

Petitioner contends that it should not be held liable for the damages sustained by respondents
and that arose from the negligence of the driver of the Fuso Road Tractor, which it had already sold to
Ecatine at the time of the accident. Not having employed Raul Tutor, the driver of the vehicle, it could
not have controlled or supervised him.[18]
We are not persuaded. In negligence cases, the aggrieved party may sue the negligent party
under (1) Article 100[19] of the Revised Penal Code, for civil liability ex delicto; or (2) under Article
2176[20] of the Civil Code, for civil liability ex quasi delicto.[21]
Furthermore, under Article 103 of the Revised Penal Code, employers may be held subsidiarily
liable for felonies committed by their employees in the discharge of the latters duties. [22] This liability
attaches when the employees who are convicted of crimes committed in the performance of their work
are found to be insolvent and are thus unable to satisfy the civil liability adjudged. [23]
On the other hand, under Article 2176 in relation to Article 2180 [24] of the Civil Code, an action
predicated on quasi delict may be instituted against the employer for an employees act or omission.
The liability for the negligent conduct of the subordinate is direct and primary, but is subject to the
defense of due diligence in the selection and supervision of the employee.[25] The enforcement of the
judgment against the employer for an action based on Article 2176 does not require the employee to
be insolvent, since the liability of the former is solidary -- the latter being statutorily considered a joint
tortfeasor.[26] To sustain a claim based on quasi delict, the following requisites must be proven: (a)
damage suffered by the plaintiff, (b) fault or negligence of the defendant, and (c) connection of cause
and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff.[27]
These two causes of action (ex delicto or ex quasi delicto) may be availed of, subject to the
caveat[28] that the offended party cannot recover damages twice for the same act or omission or under
both causes.[29] Since these two civil liabilities are distinct and independent of each other, the failure to
recover in one will not necessarily preclude recovery in the other. [30]
In the instant case, respondents -- having failed to recover anything in the criminal case -- elected
to file a separate civil action for damages, based on quasi delict under Article 2176 of the Civil
Code.[31] The evidence is clear that the deaths and the injuries suffered by respondents and their kins
were due to the fault of the driver of the Fuso tractor.
Dated June 4, 1991, the Lease Agreement[32] between petitioner and Edwin Lim stipulated that it is
the intention of the parties to enter into a FINANCE LEASE AGREEMENT. [33] Under such scheme,
ownership of the subject tractor was to be registered in the name of petitioner, until the value of the
vehicle has been fully paid by Edwin Lim.[34] Further, in the Lease Schedule,[35] the monthly rental for the
tractor was stipulated, and the term of the Lease was scheduled to expire on December 4, 1992. After
a few months, Lim completed the payments to cover the full price of the tractor. [36] Thus, on December
9, 1992, a Deed of Sale[37] over the tractor was executed by petitioner in favor of Ecatine represented
by Edwin Lim. However, the Deed was not registered with the LTO.
We hold petitioner liable for the deaths and the injuries complained of, because it was the
registered owner of the tractor at the time of the accident on July 17, 1994. [38] The Court has
consistently ruled that, regardless of sales made of a motor vehicle, the registered owner is the lawful
operator insofar as the public and third persons are concerned; consequently, it is directly and
primarily responsible for the consequences of its operation.[39] In contemplation of law, the
owner/operator of record is the employer of the driver, the actual operator and employer being
considered as merely its agent.[40] The same principle applies even if the registered owner of any
vehicle does not use it for public service.[41]
Since Equitable remained the registered owner of the tractor, it could not escape primary liability
for the deaths and the injuries arising from the negligence of the driver.[42]
The finance-lease agreement between Equitable on the one hand and Lim or Ecatine on the other
has already been superseded by the sale. In any event, it does not bind third persons. The rationale
for this rule has been aptly explained in Erezo v. Jepte,[43] which we quote hereunder:

x x x. The main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the registered owner. Instances are
numerous where vehicles running on public highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public, that
the motor vehicle registration is primarily ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways. [44]

Further, petitioners insistence on FGU Insurance Corp. v. Court of Appeals is


misplaced.[45] First, in FGU Insurance, the registered vehicle owner, which was engaged in a rent-a-car
business, rented out the car. In this case, the registered owner of the truck, which is engaged in the
business of financing motor vehicle acquisitions, has actually sold the truck to Ecatine, which in turn
employed Tutor. Second, in FGU Insurance, the registered owner of the vehicle was not held
responsible for the negligent acts of the person who rented one of its cars, because Article 2180 of the
Civil Code was not applicable. We held that no vinculum juris as employer and employee existed
between the owner and the driver.[46] In this case, the registered owner of the tractor is considered
under the law to be the employer of the driver, while the actual operator is deemed to be
its agent.[47] Thus, Equitable, the registered owner of the tractor, is -- for purposes of the law on quasi
delict -- the employer of Raul Tutor, the driver of the tractor. Ecatine, Tutors actual employer, is
deemed as merely an agent of Equitable.[48]
True, the LTO Certificate of Registration, dated 5/31/91, qualifies the name of the registered
owner as EQUITABLE LEASING CORPORATION/Leased to Edwin Lim. But the lease agreement
between Equitable and Lim has been overtaken by the Deed of Sale on December 9, 1992, between
petitioner and Ecatine. While this Deed does not affect respondents in this quasi delict suit, it definitely
binds petitioner because, unlike them, it is a party to it.
We must stress that the failure of Equitable and/or Ecatine to register the sale with the LTO should
not prejudice respondents, who have the legal right to rely on the legal principle that the registered
vehicle owner is liable for the damages caused by the negligence of the driver. Petitioner cannot hide
behind its allegation that Tutor was the employee of Ecatine. This will effectively prevent respondents
from recovering their losses on the basis of the inaction or fault of petitioner in failing to register the
sale. The non-registration is the fault of petitioner, which should thus face the legal consequences
thereof.

Second Issue:
Moral Damages

Petitioner further claims that it is not liable for moral damages, because respondents failed to
establish or show the causal connection or relation between the factual basis of their claim and their
wrongful act or omission, if any. [49]
Moral damages are not punitive in nature, but are designed to compensate [50] and alleviate in
some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a
person.[51] Although incapable of pecuniary computation, moral damages must nevertheless be
somehow proportional to and in approximation of the suffering inflicted. [52] This is so because moral
damages are in the category of an award designed to compensate the claimant for actual injury
suffered, not to impose a penalty on the wrongdoer.[53]
Viewed as an action for quasi delict, the present case falls squarely within the purview of Article
2219 (2),[54] which provides for the payment of moral damages in cases of quasi delict. [55] Having
established the liability of petitioner as the registered owner of the vehicle,[56] respondents have
satisfactorily shown the existence of the factual basis for the award [57] and its causal connection to the
acts of Raul Tutor, who is deemed as petitioners employee. [58] Indeed, the damages and injuries
suffered by respondents were the proximate result of petitioners tortious act or omission. [59]
Further, no proof of pecuniary loss is necessary in order that moral damages may be awarded,
the amount of indemnity being left to the discretion of the court. [60] The evidence gives no ground for
doubt that such discretion was properly and judiciously exercised by the trial court. [61] The award is in
fact consistent with the rule that moral damages are not intended to enrich the injured party, but to
alleviate the moral suffering undergone by that party by reason of the defendants culpable action. [62]
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioner.
SO ORDERED.
Puno, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on leave.

[1]
Rollo, pp. 21-31.
Third Division. Written by Justice B. A. Adefuin-de la Cruz and concurred in by Justices Quirino D. Abad Santos Jr.
[2]

(Division chairman) and Renato C. Dacudao (member).


[3]
Assailed Decision, p. 11; rollo, p. 31.
[4]
RTC Decision, p. 8; rollo, p. 57; penned by Judge Inocencio D. Maliaman.
[5]
See Annex E; rollo, p 38.
[6]
See Annex C; id., p. 35.
[7]
See Annex C-1; ibid.
[8]
Annex F; rollo, p. 38.
[9]
Respondents Memorandum, p. 1; rollo, p. 117.
[10]
Annex G; rollo, p. 45; penned by Judge Lydia Querubin Layosa.
[11]
RTC Decision, p. 5; rollo, p. 54.
[12]
Petitioners Memorandum, p. 5; rollo, p. 11.
[13]
CA Decision, p. 7; rollo, p. 27.
[14]
Id., pp. 9 & 29.
[15]
Id., pp. 10 & 30.
The case was deemed submitted for decision on December 13, 2001, upon the Courts receipt of respondents
[16]

Memorandum, which was signed by Atty. Yolando F. Lim of Mercado Lim and Associates. Petitioners Memorandum, filed
on October 24, 2001, was signed by Atty. Sergio M. Ceniza of Santos Pilapil and Associates.
[17]
Page 7; rollo, p. 101. Original in upper case.
[18]
Petitioners Memorandum, p. 9; rollo, p. 103.
[19]
This article provides:
ART. 100. Civil Liability of a person guilty of felony. - Every person criminally liable for a felony is also civilly liable.
[20]
This article provides:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a
quasi-delict and is governed by the provision of this Chapter.
Rafael Reyes Trucking Corporation v. People, 329 SCRA 600, April 3, 2000; Casupanan and Capitulo v. Laroya, GR No.
[21]

145391, August 26, 2002.


[22]
Ibid.
[23]
Franco v. Intermediate Appellate Court, 178 SCRA 333, October 5, 1989.
[24]
This article provides:
ART. 2180. The obligation imposed by article 2176 is demandable not only for ones own acts or omissions, but also for
those of persons for whom one is responsible.
xxxxxxxxx
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of
their assigned tasks, even though the former are not engaged in any business or industry.
xxxxxxxxx
[25]
Rafael Reyes Trucking Corporation v. People, supra.
Article 2194 Civil Code provides, Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is
[26]

solidary.
FGU Insurance Corporation v. Court of Appeals, 287 SCRA 718, March 23, 1998, citing Andamo v. Intermediate
[27]

Appellate Court, 191 SCRA 195, November 6, 1990.


[28]
This caveat is found in Art. 2177 of the Civil Code which states:
ART. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil
liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or
omission of the defendant.
Padilla v. Court of Appeals, 129 SCRA 558, March 31, 1984; Mendoza v. Arrieta, 91 SCRA 113, June 29, 1979;
[29]

Barredo v. Garcia, 73 Phil. 607, July 8, 1942.


[30]
Rafael Reyes Trucking Corpration v. People, supra.
[31]
Ibid.
[32]
Annex B; rollo, p. 32
[33]
Annex B-1; rollo, p. 34.
[34]
Petitioners Memorandum, p. 2; rollo, p. 8.
[35]
Annex B-1; rollo, p. 34.
[36]
Petitioners Memorandum, p. 2; rollo, p. 8.
[37]
Annex D; rollo, p. 36
[38]
Aguilar v. Commercial Savings Bank, GR No. 128705, June 29, 2001.
MYC-Agro-Industrial Corporation v. Vda. de Caldo, 132 SCRA 10, September 7, 1984, citing Vargas v. Langcay, 6
[39]

SCRA 174, September 29, 1962; Vda. de Medina v. Cresencia, 99 Phil. 506, July 11, 1956; Timbol v. Osias, 96 Phil. 989,
April 30, 1955; Montoya v. Ignacio, 94 Phil. 182, December 29, 1953; Tamayo v. Aquino et al., 105 Phil. 949, May 29,
1959.
[40]
First Malayan Leasing and Finance Corporation v. Court of Appeals, 209 SCRA 660, June 9, 1992.
[41]
BA Finance Corporation v. Court of Appeals, 215 SCRA 715, November 13, 1992.
[42]
Aguilar v. Commercial Savings Bank, supra.
[43]
102 Phil. 103, September 30, 1957, per Labrador, J.
[44]
Id., p. 108, per Labrador, J.
[45]
Maloles II v. Philips, 324 SCRA 172, January 31, 2000.
[46]

[47]
First Malayan Leasing and Finance Corporation v. Court of Appeals, 209 SCRA 660, June 9, 1992.
[48]
Ibid.
[49]
Petitioners Memorandum, p. 15; rollo, p. 109.
[50]
Dee Hua Liong Electrical Equipment Corp. v. Reyes, 145 SCRA 713, November 25, 1986.
[51]
Expertravel & Tours Inc. v. Court of Appeals, 309 SCRA 141, June 25, 1999.
[52]
Philtranco Services Enterprises Inc. v. Court of Appeals, 273 SCRA 562, June 17, 1997.
Radio Communication v. Rodriguez, 182 SCRA 899 February 28, 1990; San Miguel Brewery Inc., 21 SCRA 292,
[53]

September 29, 1967


[54]
Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
x x x x x x x x x.
[55]
Fabre Jr. v. Court of Appeals, 259 SCRA 426, July 26, 1996.
[56]
BA Finance Corporation v. Court of Appeals, supra.
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
[57]

wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of the defendants wrongful act or omission.
[58]
Philippine Veterans Bank v. NLRC, 317 SCRA 510, October 26, 1999.
San Miguel Brewery, Inc. v. Magno, 21 SCRA 292, September 29, 1967; Dee Hua Liong Electrical Equipment Corp v.
[59]

Reyes, supra.
ART. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary
[60]

damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the
court, according to the circumstances of each case.
[61]
Salao v. Court of Appeals, 284 SCRA 493, January 22, 1998.
[62]
Philippine Airlines v. Court of Appeals, supra.

21. (William Tiu, doing business under the name and style of D Rough Riders, vs. Pedro A. Arriesgado, G.R. No.
138060, 1 September 2004)

. Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked"Condor Hollow Blocks
and General Merchandise" bearing plate numberGBP-675 was loaded with firewood in Bogo,
Cebu and left for Cebu City.Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the
truckpassed over a bridge, one of its rear tires exploded. The driver, SergioPedrano, then
parked along the right side of the national highway andremoved the damaged tire to have it
vulcanized at a nearby shop, about 700meters away. Pedrano left his helper, Jose Mitante, Jr.
to keep watch over thestalled vehicle, and instructed the latter to place a spare tire six fathoms
awaybehind the stalled truck to serve as a warning for oncoming vehicles. Thetrucks tail lights
were also left on. It was about 12:00 a.m., March 16, 1987. At about 4:45 a.m., D Rough
Riders passenger bus with plate numberPBP-724 driven by Virgilio Te Laspias was cruising
along the nationalTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma
Manglicmot, Mark Joseph Mupas, 22Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr.,
Katleen Grace Serrano, Mary Jane Timbang
. 23. highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger buswas also bound for
Cebu City, and had come from Maya, Daanbantayan,Cebu. Among its passengers were the
Spouses Pedro A. Arriesgado andFelisa Pepito Arriesgado, who were seated at the right side of
the bus, aboutthree (3) or four (4) places from the front seat. As the bus was approaching the
bridge, Laspias saw the stalled truck,which was then about 25 meters away. He applied the
breaks and tried toswerve to the left to avoid hitting the truck. But it was too late; the
busrammed into the trucks left rear. The impact damaged the right side of the busand left
several passengers injured. Pedro Arriesgado lost consciousness andsuffered a fracture in his
right colles. His wife, Felisa, was brought to theDanao City Hospital. She was later transferred
to the Southern Island MedicalCenter where she died shortly thereafter. Respondent Pedro A.
Arriesgado then filed a complaint for breach ofcontract of carriage, damages and attorneys
fees before the Regional TrialCourt of Cebu City, Branch 20, against the petitioners, D Rough
Riders busoperator William Tiu and his driver, Virgilio Te Laspias on May 27, 1987.
Therespondent alleged that the passenger bus in question was cruising at a fastand high speed
along the national road, and that petitioner Laspias did nottake precautionary measures to
avoid the accident. The petitioners, for their part, filed a Third-Party Complaint against
thefollowing: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII),petitioner Tius
insurer; respondent Benjamin Condor, the registered owner ofthe cargo truck; and respondent
Sergio Pedrano, the driver of the truck. Theyalleged that petitioner Laspias was negotiating
the uphill climb along thenational highway of Sitio Aggies, Poblacion, Compostela, in a
moderate andnormal speed. It was further alleged that the truck was parked in a
slantedmanner, its rear portion almost in the middle of the highway, and that no
earlywarning device was displayed. Petitioner Laspias promptly applied thebrakes and
swerved to the left to avoid hitting the truck head-on, but despitehis efforts to avoid damage
to property and physical injuries on thepassengers, the right side portion of the bus hit the
cargo trucks left rear.HELD: The rules which common carriers should observe as to the safety
of theirpassengers are set forth in the Civil Code, Articles 1733, 1755and 1756. It
isundisputed that the respondent and his wife were not safely transported to thedestination
agreed upon. In actions for breach of contract, only the existence of suchcontract, and the fact
that the obligor, in this case the common carrier, failed totransport his passenger safely to his
destination are the matters that need to be proved.This is because under the said contract of
carriage, the petitioners assumed theexpress obligation to transport the respondent and his
wife to their destination safelyand to observe extraordinary diligence with due regard for all
circumstances. Anyinjury suffered by the passengers in the course thereof is immediately
attributable tothe negligence of the carrier. Upon the happening of the accident, the
presumption ofnegligence at once arises, and it becomes the duty of a common carrier to prove
thathe observed extraordinary diligence in the care of his passengers. It must be stressedthat in
requiring the highest possible degree of diligence from common carriers and increating a
presumption of negligence against them, the law compels them to curb therecklessness of their
drivers. While evidence may be submitted to overcome suchpresumption of negligence, it must
be shown that the carrier observed the requiredextraordinary diligence, which means that the
carrier must show the utmost diligenceof very cautious persons as far as human care and
foresight can provide, or that theaccident was caused by fortuitous event. As correctly found by
the trial court,petitioner Tiu failed to conclusively rebut such presumption. The negligence
ofTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph
Mupas, 23Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano,
Mary Jane Timbang
. 24. petitioner Laspias as driver of the passenger bus is, thus, binding against petitionerTiu, as
the owner of the passenger bus engaged as a common carrier.B. EXTRAORDINARY
DILIGENCEREQUIREMENT OF EXTRAORDINARY DILIGENCE Common Carriers, from the
nature of their business and for reasons ofpublic policy, are bound to observe extraordinary
diligence on the vigilanceover goods and for the safety of the passengers transported by
themaccording to all the circumstances of each case. (Art. 1733, Civil Code)Coverage1.
Vigilance over goods (Arts. 1734-1754)2. Safety of passengers (Arts. 1755-1763)Passenger
- A person who has entered into a contract of carriage, express orimplied, with the carrier.
They are entitled to extraordinary diligence from thecommon carrier. Persons Not Considered
As Passengers 1. One who has not yet boarded any part of a vehicle regardless of whether or
not he has purchased a ticket; 2. One who remains on a carrier for an unreasonable length of
time after he has been afforded every safe opportunity to alight; 3. One who has boarded by
fraud, stealth, or deceit; 4. One who attempts to board a moving vehicle, although he has a
ticket, unless the attempt be with the knowledge and consent of the carrier; 5. One who
boarded a wrong vehicle, has been properly informed of such fact, and on alighting, is injured
by the carrier; or 6. One who rides any part of the vehicle which is unsuitable or dangerous or
which he knows is not designed or intended for passengers.RULES ON PRESUMPTION OF
NEGLIGENCE:A. In the Carriage of Goods: In case of loss, destruction and deterioration of
goods, common carriers are presumed to be at fault or have acted negligently, unless they
prove that they exercise extraordinary diligence. In the transport of goods, mere proof of
delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the
place of destination in bad order makes for a prima facie case against the carrier.B. In the
Carriage of Passengers: In case of death or injury to passengers, common carriers are
presumed to be at fault or have acted negligently, unless they prove that they exercise
extraordinary diligence. .(Art. 1755,NCC) The court need not make an express finding of
fault or negligence of common carriers. The law imposes upon common carriers strict liability,
as long as it is shown that there exists a relationship between the passenger and the common
carrier and that injury or death took place during the existence of the contract. The common
carrier is not an absolute insurer against all possible risks of transportation or travel. (Pilapil vs.
CA et al, 180 SCRA 546)Doctrine of Proximate Cause is NOT applicable to contract of
carriageTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark
Joseph Mupas, 24Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace
Serrano, Mary Jane Timbang
. 25. The injured passenger or owner of goods need not prove causation to establish his case.
The presumption arises upon the happening of the accident. (Calalas v. CA, 383 SCRA,
[2002])DEFENSES OF COMMON CARRIERSGeneral Rule: Common carriers are responsible for
the loss, destruction ordeterioration of the goods.Exceptions: The same is due to any of the
following causes only:a. Flood, storm, earthquake, lightning or other natural disaster or
calamity;b. Act of public enemy in war, whether international or civil;c. Act or omission of the
shipper or the owner of the goods;d. The character of the goods or defects in the packing or in
the containers;e. Order or act of competent authority. (Art.1734, Civil Code) The above
enumeration is exclusive. If not one of those enumerated is present, the carrier is liable. (Belgian
Chartering and Shipping, N.V. v. Phil. First Insurance Co.,Inc., 383 SCRA, 2002) The
exceptions in Art 1734 must be proven whether the presumption of negligence applies.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods
transported by them. They are presumed to have been at fault or to have acted negligently if
the goods are lost, destroyed or deteriorated. To overcome the presumption of negligence in
case of loss, destruction or deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of
the Civil Code enumerates the instance when the presumption of negligence does not attach.
(Delsan v. Trans. American Home Insurance, August 15, 2006)a. Caso Fortuito / Force Majeure
Requisites: a. Must be the proximate and only cause of the loss; b. Event independent of human
will; c. Occurrence makes it impossible for debtor to fulfill the obligation in a normal manner; d.
Obligor must be free of participation in, or aggravation of, the injury to the debtor; and e.
Impossible to foresee or impossible to avoid. o Fire is not considered a natural disaster or
calamity as it arises almost invariably from some act of man or by human means unless caused
by lightning or by natural disaster or calamity. It may even be caused by the actual fault or
privity of the common carrier. (Eastern Shipping Lines Inc. vs. IAC, 150 SCRA 469, [1987]) o
Mechanical defects are not force majeure if the same was discoverable by regular and adequate
inspections. (Aquino T. & Hernando, Notes and Cases on the Law on Transportation and Public
Utilities, , R.P. 2004 ed. p.120-122)B. Act of God Requisites: 1. The common carrier must
have exercised extraordinary diligence before, during and after the time of the accident; 2. The
event must be unforeseen or even if it can be foreseen, it cannot be avoided; 3. There must have
been no undue delay on the part of the common carrier;TRANSPORTATION LAW: Lawrence
Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 25Melanie Pascua, Gilbert
Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
. 26. 4. The proximate cause must not be committed by the common carrier. Fortuitous event
must be established to be the proximate cause of the loss. (Asia Lighterage and Shipping, Inc. v.
CA, et al., 409 SCRA, [2003]) Exemption to Liability From Natural Disasters or Calamities: 1.
The natural disaster must have been the proximate cause of the loss. 2. It must have been the
cause of the loss. 3. The common carrier must have exercised due diligence to prevent or
minimize the damage or loss before, during and after the natural disaster. 4. The common
carrier has not negligently incurred delay in transporting the goods.C. Acts of Public Enemy In
War Requisites: 1. The act of the public enemy must have been the proximate and only cause of
the loss; and 2. The common carrier must have exercised due diligence to prevent or minimize
the loss before, during or after the act causing the loss, deterioration or destruction of the
goods (Art. 1739, Civil Code)D. Act or Omission of the Shipper or Owner of Goods 1. The act or
omission of the shipper/owner must have been the sole and proximate cause of the loss. This is
an absolute defense. 2. Contributory Negligence: partial defense. (Art. 1741, Civil Code )
Doctrine of Contributory Negligence Failure of a person who has been exposed to injury by the
fault or negligence of another, to use such degree of care for his safety and protection as
ordinarily prudent men would use under the circumstances. (Rakes v. Atlantic, Gulf and Pacific
Co., 7 Phil. 359 [1907]) The common carrier shall be liable even if the shipper or owner
merely contributed to the loss, destruction or deterioration of the goods, the proximate cause
thereof being the negligence of the common carrier, the latter shall be liable in damages, which,
however, shall be equitably reduced. (Art. 1741, Civil Code)E. Character of the Goods or
Defects in the Packing or in the Container That the loss, destruction or deterioration was
caused by the character of the goods or the faulty packing or containers. Even if the damage
should be caused by the inherent defect/character of the goods, the common carrier must
exercise due diligence to forestall or lessen the loss. (Art. 1742, Civil Code) o The rule is that if
the improper packing is known to the carrier or his employee or is apparent upon ordinary
observation, but he nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for the resulting damage. (A.F.
Sanchez Brokerage Inc. vs. C.A., 447 SCRA 427, [2004])E. Order or Act of Public Authority
The common carrier is not ipso facto relieved fromTRANSPORTATION LAW: Lawrence Jeffrey
Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 26Melanie Pascua, Gilbert Ricaforte,
Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
. 27. liability due to the loss, destruction or deterioration of goods caused by public authority.
Requisites: The common carrier must prove that the public authority has the power to issue
the order for the seizure or destruction of the goods. The common carrier must exercise
extraordinary diligence to prevent or minimize the loss, destruction or deterioration of he
goods at the time of the accident. o Said public authority must have the power to issue the
order (Article 1743, Civil Code). Consequently, where the officer acts without legal process, the
common carrier will be held liable. (Ganzon v. CA 161,

22. (Spouses Cesar & Suthira Zalamea vs. Court of Appeals, G.R. No. 104235 November 18, 1993)

23. (Singapore Airlines Limited vs. Fernandez, G.R. No. 142305, December 10, 2003)

SECOND DIVISION

[G.R. No. 142305. December 10, 2003]

SINGAPORE AIRLINES LIMITED, petitioner, vs. ANDION


FERNANDEZ, respondent.

DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari assailing the Decision[1] of the Court of Appeals which
affirmed in toto the decision[2] of the Regional Trial Court of Pasig City, Branch 164 in Civil Case No.
60985 filed by the respondent for damages.

The Case for the Respondent

Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and abroad. At
the time of the incident, she was availing an educational grant from the Federal Republic of Germany,
pursuing a Masters Degree in Music majoring in Voice.[3]
She was invited to sing before the King and Queen of Malaysia on February 3 and 4, 1991. For
this singing engagement, an airline passage ticket was purchased from petitioner Singapore Airlines
which would transport her to Manila from Frankfurt, Germany on January 28, 1991. From Manila, she
would proceed to Malaysia on the next day.[4] It was necessary for the respondent to pass by Manila in
order to gather her wardrobe; and to rehearse and coordinate with her pianist her repertoire for the
aforesaid performance.
The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ 27,
leaving Frankfurt, Germany on January 27, 1991 bound for Singapore with onward connections
from Singapore to Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at 1:45 in the afternoon
of January 27, 1991, arriving at Singapore at 8:50 in the morning of January 28, 1991. The
connecting flight from Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00 in the
morning of January 28, 1991, arriving in Manila at 2:20 in the afternoon of the same day.[5]
On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or at
about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as
scheduled, leaving the respondent and about 25 other passengers stranded in
the Changi Airport in Singapore.[6]
Upon disembarkation at Singapore, the respondent approached the transit counter who referred
her to the nightstop counter and told the lady employee thereat that it was important for her to
reach Manilaon that day, January 28, 1991. The lady employee told her that there were no more
flights to Manila for that day and that respondent had no choice but to stay in Singapore. Upon
respondents persistence, she was told that she can actually fly to Hong Kong going to Manila but
since her ticket was non-transferable, she would have to pay for the ticket. The respondent could not
accept the offer because she had no money to pay for it. [7] Her pleas for the respondent to make
arrangements to transport her to Manila were unheeded.[8]
The respondent then requested the lady employee to use their phone to make a call
to Manila. Over the employees reluctance, the respondent telephoned her mother to inform the latter
that she missed the connecting flight. The respondent was able to contact a family friend who picked
her up from the airport for her overnight stay in Singapore.[9]
The next day, after being brought back to the airport, the respondent proceeded to petitioners
counter which says: Immediate Attention To Passengers with Immediate Booking. There were four or
five passengers in line. The respondent approached petitioners male employee at the counter to
make arrangements for immediate booking only to be told: Cant you see I am doing something. She
explained her predicament but the male employee uncaringly retorted: Its your problem, not ours.[10]
The respondent never made it to Manila and was forced to take a direct flight
from Singapore to Malaysia on January 29, 1991, through the efforts of her mother and travel agency
in Manila. Her mother also had to travel to Malaysia bringing with her respondents wardrobe and
personal things needed for the performance that caused them to incur an expense of about
P50,000.[11]
As a result of this incident, the respondents performance before the Royal Family of Malaysia was
below par. Because of the rude and unkind treatment she received from the petitioners personnel
in Singapore, the respondent was engulfed with fear, anxiety, humiliation and embarrassment causing
her to suffer mental fatigue and skin rashes. She was thereby compelled to seek immediate medical
attention upon her return to Manila for acute urticaria.[12]
On June 15, 1993, the RTC rendered a decision with the following dispositive portion:

ACCORDINGLY and as prayed for, defendant Singapore Airlines is ordered to pay herein
plaintiff Andion H. Fernandez the sum of:

1. FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages;


2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as moral
damages considering plaintiffs professional standing in the field of culture at
home and abroad;

3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary damages;

4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorneys fees; and

5. To pay the costs of suit.

SO ORDERED. [13]

The petitioner appealed the decision to the Court of Appeals.


On June 10, 1998, the CA promulgated the assailed decision finding no reversible error in the
appealed decision of the trial court.[14]
Forthwith, the petitioner filed the instant petition for review, raising the following errors:
I

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE


DECISION OF THE TRIAL COURT THAT AWARDED DAMAGES TO RESPONDENT FOR
THE ALLEGED FAILURE OF THE PETITIONER TO EXERCISE EXTRAORDINARY
DILIGENCE.

II

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER


ACTED IN BAD FAITH.

III

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS


COUNTERCLAIMS. [15]

The petitioner assails the award of damages contending that it exercised the extraordinary
diligence required by law under the given circumstances. The delay of Flight No. SQ 27
from Frankfurt to Singapore on January 28, 1991 for more than two hours was due to a fortuitous
event and beyond petitioners control. Inclement weather prevented the petitioners plane coming
from Copenhagen, Denmark to arrive in Frankfurt on time on January 27, 1991. The plane could not
take off from the airport as the place was shrouded with fog. This delay caused a snowball effect
whereby the other flights were consequently delayed. The plane carrying the respondent arrived
in Singapore two (2) hours behind schedule.[16] The delay was even compounded when the plane
could not travel the normal route which was through the Middle East due to the raging Gulf War at that
time. It had to pass through the restricted Russian airspace which was more congested.[17]
Under these circumstances, petitioner therefore alleged that it cannot be faulted for the delay in
arriving in Singapore on January 28, 1991 and causing the respondent to miss her connecting flight
to Manila.
The petitioner further contends that it could not also be held in bad faith because its personnel did
their best to look after the needs and interests of the passengers including the respondent. Because
the respondent and the other 25 passengers missed their connecting flight to Manila, the petitioner
automatically booked them to the flight the next day and gave them free hotel accommodations for the
night. It was respondent who did not take petitioners offer and opted to stay with a family friend
in Singapore.
The petitioner also alleges that the action of the respondent was baseless and it tarnished its
good name and image earned through the years for which, it was entitled to damages in the amount
of P1,000,000; exemplary damages of P500,000; and attorneys fees also in the amount
of P500,000.[18]
The petition is barren of merit.
When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger then has every right to expect that he be transported on
that flight and on that date. If he does not, then the carrier opens itself to a suit for a breach of contract
of carriage.[19]
The contract of air carriage is a peculiar one. Imbued with public interest, the law requires
common carriers to carry the passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons with due regard for all the circumstances. [20] In an action
for breach of contract of carriage, the aggrieved party does not have to prove that the common carrier
was at fault or was negligent. All that is necessary to prove is the existence of the contract and the fact
of its non-performance by the carrier.[21]
In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the
two-legged trip from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her
contract of carriage with the petitioner, the respondent certainly expected that she would fly
to Manila on Flight No. SQ 72 on January 28, 1991. Since the petitioner did not transport the
respondent as covenanted by it on said terms, the petitioner clearly breached its contract of carriage
with the respondent. The respondent had every right to sue the petitioner for this breach. The defense
that the delay was due to fortuitous events and beyond petitioners control is unavailing. In PAL vs.
CA,[22] we held that:

.... Undisputably, PALs diversion of its flight due to inclement weather was a fortuitous
event. Nonetheless, such occurrence did not terminate PALs contract with its passengers. Being in
the business of air carriage and the sole one to operate in the country, PAL is deemed to be
equipped to deal with situations as in the case at bar. What we said in one case once again must be
stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the
port of destination and has left the carriers premises. Hence, PAL necessarily would still have to
exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its
stranded passengers until they have reached their final destination...

...
...If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and
only cause (Art. 1755 C.C., Art. 1733 C.C.). Since part of the failure to comply with the obligation
of common carrier to deliver its passengers safely to their destination lay in the defendants failure
to provide comfort and convenience to its stranded passengers using extraordinary diligence, the
cause of non-fulfillment is not solely and exclusively due to fortuitous event, but due to something
which defendant airline could have prevented, defendant becomes liable to plaintiff.

Indeed, in the instant case, petitioner was not without recourse to enable it to fulfill its obligation to
transport the respondent safely as scheduled as far as human care and foresight can provide to her
destination. Tagged as a premiere airline as it claims to be and with the complexities of air travel, it
was certainly well-equipped to be able to foresee and deal with such situation. The petitioners
indifference and negligence by its absence and insensitivity was exposed by the trial court, thus:
(a) Under Section 9.1 of its Traffic Manual (Exhibit 4) flights can be delayed to await the uplift of
connecting cargo and passengers arriving on a late in-bound flight As adverted to by the trial
court,Flight SQ-27/28 maybe delayed for about half an hour to transfer plaintiff to her connecting
flight. As pointed out above, delay is normal in commercial air transportation (RTC Decision, p.
22); or
(b) Petitioner airlines could have carried her on one of its flights bound for Hongkong and arranged for
a connecting flight from Hongkong to Manila all on the same date. But then the airline personnel
who informed her of such possibility told her that she has to pay for that flight. Regrettably,
respondent did not have sufficient funds to pay for it. (TSN, 30 March 1992, pp.8-9; RTC
Decision, pp. 22-23) Knowing the predicament of the respondent, petitioner did not offer to
shoulder the cost of the ticket for that flight; or
(c) As noted by the trial court from the account of petitioners witness, Bob Khkimyong, that a
passenger such as the plaintiff could have been accommodated in another international airline
such as Lufthansa to bring the plaintiff to Singapore early enough from Frankfurt provided that
there was prior communication from that station to enable her to catch the connecting flight to
Manila because of the urgency of her business in Manila(RTC Decision, p. 23)
The petitioners diligence in communicating to its passengers the consequences of the delay in
their flights was wanting. As elucidated by the trial court:

It maybe that delay in the take off and arrival of commercial aircraft could not be avoided and may
be caused by diverse factors such as those testified to by defendants pilot. However, knowing fully
well that even before the plaintiff boarded defendants Jumbo aircraft in Frankfurt bound
for Singapore, it has already incurred a delay of two hours. Nevertheless, defendant did not take
the trouble of informing plaintiff, among its other passengers of such a delay and that in such a
case, the usual practice of defendant airline will be that they have to stay overnight at their
connecting airport; and much less did it inquire from the plaintiff and the other 25 passengers
bound for Manila whether they are amenable to stay overnight in Singapore and to take the
connecting flight to Manila the next day. Such information should have been given and inquiries
made in Frankfurt because even the defendant airlines manual provides that in case of urgency to
reach his or her destination on the same date, the head office of defendant in Singapore must be
informed by telephone or telefax so as the latter may make certain arrangements with other airlines
in Frankfurt to bring such a passenger with urgent business to Singapore in such a manner that the
latter can catch up with her connecting flight such as S-27/28 without spending the night in
Singapore [23]

The respondent was not remiss in conveying her apprehension about the delay of the flight when
she was still in Frankfurt. Upon the assurance of petitioners personnel in Frankfurt that she will be
transported to Manila on the same date, she had every right to expect that obligation fulfilled. She
testified, to wit:
Q: Now, since you were late, when the plane that arrived from Frankfurt was late, did you not make
arrangements so that your flight from Singapore to Manila would be adjusted?
A: I asked the lady at the ticket counter, the one who gave the boarding pass in Frankfurt and I asked
her, Since my flight going to Singapore would be late, what would happen to my Singapore-Manila
flight? and then she said, Dont worry, Singapore Airlines would be responsible to bring you to
Manila on the same date. And then they have informed the name of the officer, or whatever, that
our flight is going to be late.[24]
When a passenger contracts for a specific flight, he has a purpose in making that choice which
must be respected. This choice, once exercised, must not be impaired by a breach on the part of the
airline without the latter incurring any liability. [25] For petitioners failure to bring the respondent to her
destination, as scheduled, we find the petitioner clearly liable for the breach of its contract of carriage
with the respondent.
We are convinced that the petitioner acted in bad faith. Bad faith means a breach of known duty
through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill will,
may well have been the motive; but it is malice nevertheless.[26] Bad faith was imputed by the trial court
when it found that the petitioners employees at the Singapore airport did not accord the respondent
the attention and treatment allegedly warranted under the circumstances. The lady employee at the
counter was unkind and of no help to her. The respondent further alleged that without her threats of
suing the company, she was not allowed to use the companys phone to make long distance calls to
her mother in Manila. The male employee at the counter where it says: Immediate Attention to
Passengers with Immediate Booking was rude to her when he curtly retorted that he was busy
attending to other passengers in line. The trial court concluded that this inattentiveness and rudeness
of petitioners personnel to respondents plight was gross enough amounting to bad faith. This is a
finding that is generally binding upon the Court which we find no reason to disturb.
Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship,
exemplary damages may be awarded only if the defendant had acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner. In this case, petitioners employees acted in a wanton,
oppressive or malevolent manner. The award of exemplary damages is, therefore, warranted in this
case.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

[1]
Penned by Associate Justice Corona Ibay-Somera with Associate
Justices Oswaldo D. Agcaoili and Renato C. Dacudao, concurring.
[2]
Penned by Judge Apolonio R. Chavez, Jr.
[3]
TSN, 30 March 1992, p. 22.
[4]
Id. at 11-12.
[5]
Records, p. 2.
[6]
TSN, 11 June 1992, p. 17.
[7]
TSN, 30 March 1992, p. 8.
[8]
Records, p. 3.
[9]
TSN, 30 March 1992, pp. 9-10.
[10]
Id. at 14.
[11]
Id. at 23.
[12]
TSN, 30 March 1992, p. 21; Exhibit E; Records, p. 80.
[13]
Records, p. 202.
[14]
Rollo, p. 36.
[15]
Rollo, pp. 15-16.
[16]
TSN, 28 May 1992, p. 8.
[17]
Id. at 15-16.
[18]
Records, pp. 45-47.
[19]
Alitalia Airways vs. CA, 187 SCRA 763 (1990).
[20]
PAL vs. CA, 226 SCRA 423 (1993).
[21]
China Airlines, Ltd. vs. Court of Appeals, et al., G.R. No. 129988, July 14, 2003.
[22]
Supra at note 28.
[23]
Records, pp. 198-199.
[24]
TSN, 30 March 1992, pp. 6-7.
[25]
Alitalia Airways vs. CA, supra.
[26]
Lopez vs. Pan American World Airways, 16 SCRA 431 (1966).

24. (Philippine Airlines, Inc., vs. Court of Appeals, G.R. No. 119641, May 17, 1996)

In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) assails the decision of respondent Court of Appeals in CA-G.R. CV
No. 29147 1 which affirmed the judgment of the trial court finding herein petitioner liable as follows: jgc:chanroble s.com.p h

"Wherefore, premises considered, judgment is hereby rendered ordering the defendant, Philippine Airlines or PAL, to pay to the plaintiffs,
Dr. Josefino Miranda and Luisa Miranda, the sum of P100,000.00 as moral damages; P30,000.00 as exemplary or corrective damages;
P10,000.00 as attorneys fees; and the costs." 2

The factual antecedents of the present petition reveal that sometime in May, 1988, Dr. Josefino Miranda and his wife, Luisa, who were
residents of Surigao City, went to the United States of America on a regular flight of Philippine Airlines, Inc. (PAL). On June 19, 1988,
after a stay of over a month there, they obtained confirmed bookings from PALs San Francisco Office for PAL Flight PR 101 from San
Francisco to Manila via Honolulu on June 21, 1988; PAL Flight PR 851 from Manila to Cebu on June 24, 1988; and PAL Flight PR 905 from
Cebu to Surigao also on June 24, 1988.

Accordingly, on June 21, 1988, private respondents boarded PAL Flight PR 101 in San Francisco with five (5) pieces of baggage. After
a stopover at Honolulu, and upon arrival in Manila on June 23, 1988, they were told by the PAL personnel that their baggage consisting
of two balikbayan boxes, two pieces of luggage and one fishing rod case were off-loaded at Honolulu, Hawaii due to weight limitations.
Consequently, private respondents missed their connecting flight from Manila to Cebu City, as originally scheduled, since they had to
wait for their baggage which arrived the following day, June 24, 1988, after their pre-scheduled connecting flight had left. They
consequently also missed their other scheduled connecting flight from Cebu City to Surigao City.

On June 25, 1988, they departed for Cebu City and therefrom private respondents had to transfer to PAL Flight 471 for Surigao City. On
the way to Surigao City, the pilot announced that they had to return to Mactan Airport due to some mechanical problem. While at Mactan
Airport, the passengers were provided by PAL with lunch and were booked for the afternoon flight to Surigao City. However, said flight
was also canceled.

Since there were no more flights for Surigao City that day, private respondents asked to be billeted at the Cebu Plaza Hotel where they
usually stay whenever they happen to be in Cebu City. They were, however, told by the PAL employees that they could not be
accommodated at said hotel supposedly because it was fully booked. Contrarily, when Dr. Miranda called the hotel, he was informed that
he and his wife could be accommodated there. Although reluctant at first, PAL eventually agreed to private respondents overnight stay
at said hotel. Oscar Jereza, PAL duty manager, approved the corresponding hotel authority with standard meals. It was only after
private respondents insistence that their meals be ordered a la carte that they were allowed to do so by PAL provided that they sign for
their orders.

Inasmuch as the shuttle bus had already left by the time private respondents were ready to go to the hotel, PAL offered them P150.00
to include the fare for the return trip to the airport. Dr. Miranda asked for P150.00 more as he and his wife, along with all of their
baggage, could not be accommodated in just one taxi, aside from the need for tipping money for hotel boys. Upon refusal of this simple
request, Dr. Miranda then declared that he would forego the amenities offered by PAL. Thus, the voucher for P150.00 and the authority
for the hotel accommodations prepared by PAL were voided due to private respondents decision not to avail themselves thereof.

To aggravate the muddled situation, when private respondents tried to retrieve their baggage, they were told this time that the same
were loaded on another earlier PAL flight to Surigao City. Thus, private respondents proceeded to the hotel sans their baggage and of
which they were deprived for the remainder of their trip. Private respondents were finally able to leave on board the first PAL flight to
Surigao City only on June 26, 1988. Thereafter, they instituted an action for damages which, after trial as well as on appeal, was decided
in their favor.

Petitioner PAL has come to us via the instant petition for review on certiorari, wherein it challenges the affirmatory decision of
respondent Court of Appeals 3 (1) for applying Articles 2220, 2232 and 2208 of the Civil Code when it sustained the award of the court
a quo for moral and exemplary damages and attorneys fees despite absence of bad faith on its part; and (2) for not applying the
express provisions of the contract of carriage and pertinent provisions of the Warsaw Convention limiting its liability to US$20.00 per
kilo of baggage .

1. Anent the first issue, petitioner argues that there was no bad faith on its part for while there was admittedly a delay in fulfilling its
obligation under the contract of carriage with respect to the transport of passengers and the delivery of their baggage, such delay was
justified by the paramount consideration of ensuring the safety of its passengers. It likewise maintains that its employees treated
private respondents fairly and with courtesy to the extent of acceding to most of their demands in order to mitigate the inconvenience
occasioned by the measures undertaken by the airline to ensure passenger safety. 4

It reiterated its position that the off-loading of private respondents baggage was due to "weight limitations," as lengthily explained by
petitioner from an aeronautically technical viewpoint, 5 taking into consideration such variable factors as flight distance, weather, air
resistance, runway condition and fuel requirement. Given the variable weather conditions, it claimed that the weight limitation for each
flight can only be ascertained shortly before take-off. While admittedly there would be a resulting inconvenience in the accommodations
of the passengers and the handling of their cargo, the same is outweighed by the paramount concern for the safety of the flight.

Petitioner moreover impugns the Court of Appeals allegedly improper reliance on the inaccurate interpretation of the testimony of PALs
baggage service representative, Edgar Mondejar, * that private respondents baggage were off-loaded to give preference to baggage
and/or cargo originating from Honolulu. PAL argues that Mondejars knowledge of what transpired in Honolulu was merely based on the
telex report forwarded to PALs Manila station stating that the off-loading was due to weight limitations. 6

Petitioner enumerates the following incidents as indicative of its good faith in dealing with private respondents: (1) The cancellation of
the flight to Surigao City due to mechanical/engine trouble was to ensure the safety of passengers and cargo; (2) PAL offered to
shoulder private respondents preferred accommodations, meals and transportation while in Cebu City with more than the usual
amenities given in cases of flight disruption, and gave them priority in the following days flight to Surigao City; (3) PAL employees did
not act rudely towards private respondents and its managerial personnel even gave them special attention, (4) It was reasonable for
PAL to limit the transportation expense to P150.00, considering that the fare between the airport and the hotel was only P75.00, and
they would be picked up by the shuttle bus from the hotel to the airport, while the request for money for tips could not be justified; and
(5) The inadvertent loading of private respondents baggage on the replacement flight to Surigao City was at most simple and excusable
negligence due to the numerous flight disruptions and large number of baggage on that day.

Petitioner strenuously, and understandably, insists that its employees did not lie to private respondents regarding the want of
accommodations at the latters hotel of preference. The only reason why Cebu Plaza Hotel was not initially offered to them by PAL was
because of the earlier advice of the hotel personnel that not all the stranded PAL passengers could be accommodated therein. It claimed
that it was in accordance with the airlines policy of housing all affected passengers in one location for easy communication and
transportation, which accommodations in this instance could be provided by Magellan Hotel. However, upon insistence of the Mirandas
on their preference for Cebu Plaza Hotel, Jeremias Tumulak, PALs passenger relations officer, told them that they could use the office
phone and that if they could arrange for such accommodation PAL would shoulder the expenses. This concession, so petitioner avers,
negates any malicious intent on its part.

Crucial to the determination of the propriety of the award of damages in this case is the lower courts findings on the matter of bad faith,
which deserves to be quoted at length: jgc:chan roble s.com.p h

"These claims were reasonable and appeared to be supported by the evidence. Thus it cannot be denied that plaintiffs had to undergo
some personal inconveniences in Manila for lack of their baggage. It is also highly probable that plaintiffs scheduled return to Surigao
City was upset because of their having to wait for one day for their missing things. Consequently, it was quite evident that the
off-loading of plaintiffs baggage in Honolulu was the proximate cause of plaintiffs subsequent inconveniences for which they claimed
to have suffered social humiliation, wounded feelings, frustration and mental anguish.

x x x

"In the present case there was a breach of contract committed in bad faith by the defendant airlines. As previously noted, plaintiffs had
a confirmed booking on PAL Flight PR 101 from San Francisco to Manila. Therefore plaintiffs were entitled to an assured passage not only
for themselves but for their baggage as well. They had a legal right to rely on this.

"The evidence showed that plaintiffs baggage were properly loaded and stowed in the plane when it left San Francisco for Honolulu. The
off-loading or bumping off by defendant airlines of plaintiffs baggage to give way to other passengers or cargo was an arbitrary and
oppressive act which clearly amounted to a breach of contract committed in bad faith and with malice. In the aforecited case, the
Supreme Court defined bad faith as a breach of a known duty through some motive of interest or ill will. Self-enrichment or fraternal
interest, and not personal ill will, may have been the motive, but it is malice nevertheless (infra).

"As correctly pointed out in the Memorandum for Plaintiffs dated June 18, 1990 (pp. 4-5), the following excerpt from the testimony of
Edgar Mondejar clearly demonstrated the act of discrimination perpetrated by defendant on the herein plaintiffs (TSN, Edgar Mondejar,
Feb. 28, 1990, pp. 26-28), thus: chan rob1e s virt ual 1aw l ibra ry

Q: Before a plane departs, your office will see to it the plane loads the exact weight limitation insofar as the cargoes (sic) and passengers
are concerned, is that correct?

A: Yes.

Q: And so with the PR 101 flight starting mainland USA, it complied with the weight limitation, passengers and baggages (sic) limitation,
is that correct?

A: Yes.

Q: In other words the trip from the mainland USA started in Hawaii to off-load cargoes (sic), you complied with the weight limitation and
so on?

A: Yes.

Q: But you are saying upon arriving in Honolulu certain containers were off-loaded?

A: Yes.

Q: That would be therefore some containers were off-loaded to give way to some other containers starting from Honolulu towards
Manila?

A: Yes.

Q: In other words Mr. Mondejar, preference was given to cargoes (sic) newly loaded at Honolulu instead of the cargoes (sic) already
from mainland USA, is that correct?

A: Yes.

"The aforesaid testimony constituted a clear admission in defendants evidence of facts amounting to a breach of contract in bad faith.
This being so, defendant must be held liable in damages for the consequences of its action." 7 (Corrections indicated in original text.)

The trial court further found that the situation was aggravated by the following incidents: the poor treatment of the Mirandas by the PAL
employees during the stopover at Mactan Airport in Cebu; the cavalier and dubious response of petitioners personnel to the Miranda
spouses request to be billeted at the Cebu Plaza Hotel by denying the same allegedly because it was fully booked, which claim was
belied by the fact that Dr. Miranda was easily able to arrange for accommodations thereat, and, the PAL employees negligent, almost
malicious, act of sending off the baggage of private respondents to Surigao City, while they were still in Cebu, without any explanation
for this gross oversight. 8
The Court of Appeals affirmed these findings of the trial court by stating that

"While we recognize an airlines prerogative to off-load baggag(e) to conform with weight limitations for the purpose of ensuring the
safety of passengers, We, however, cannot sanction the motion (sic) and manner it was carried out in this case.

"It is uncontroverted that appellees baggag(e) were properly weighed and loaded in the plane when it left San Francisco for Honolulu.
When they reached Honolulu, they were not informed that their baggag(e) would be off-loaded. Ironically, if the purpose of the
off-loading was to conform with the weight limitations, why were other containers loaded in Honolulu? The real reason was revealed by
Edgar Mondejar, baggage service representative of the appellant. . . . 9

x x x

"As earlier noted, the off-loading of appellees baggag(e) was done in bad faith because it was not really for the purpose of complying
with weight limitations but to give undue preference to newly-loaded baggag(e) in Honolulu. This was followed by another mishandling
of said baggag(e) in the twice-cancelled connecting flight from Cebu to Surigao. Appellees sad experience was further aggravated by
the misconduct of appellants personnel in Cebu, who lied to appellees in denying their request to be billeted at Cebu Plaza Hotel. 10

The Court has time and again ruled, and it cannot be over-emphasized, that a contract of air carriage generates a relation attended with
a public duty and any discourteous conduct on the part of a carriers employee toward a passenger gives the latter an action for
damages and, more so, where there is bad faith. 11

It is settled that bad faith must be duly proved and not merely presumed. The existence of bad faith, being a factual question, and the
Supreme Court not being a trier of facts, the findings thereon of the trial court as well as of the Court of Appeals shall not be disturbed
on appeal and are entitled to great weight and respect. 12 Said findings are final and conclusive upon the Supreme Court except, inter
alia, where the findings of the Court of Appeals and the trial court are contrary to each other. 13

It is evident that the issues raised in this petition are the correctness of the factual findings of the Court of Appeals of bad faith on the
part of petitioner and the award of damages against it. This Court has consistently held that the findings of the Court of Appeals and the
other lower courts are as a rule binding upon it, subject to certain exceptions created by case law. As nothing in the record indicates any
of such exceptions, the factual conclusions of the appellate court must be affirmed. 14

It is now firmly settled that moral damages are recoverable in suits predicated on breach of a contract of carriage where it is proved that
the carrier was guilty of fraud or bad faith. 15 Inattention to and lack of care for the interests of its passengers who are entitled to its
utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to an award of moral
damages. What the law considers as bad faith which may furnish the ground for an award of moral damages would be bad faith in
securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other kind of deceit. 16 Such
unprofessional and prescribed conduct is attributable to petitioner airline in the case at bar and the adverse doctrinal rule is accordingly
applicable to it.

In Cathay Pacific Airways, Ltd. v. Court of Appeals, Et Al., 17 a case which is virtually on all fours with the present controversy, we
stated: jgc:chanrobles. com.ph

"In the case at bar, both the trial court and the appellate court found that CATHAY was grossly negligent and reckless when it failed to
deliver the luggage of petitioner at the appointed place and time. We agree. . . While the mere failure of CATHAY to deliver respondents
luggage at the agreed place and time did not ipso facto amount to willful misconduct since the luggage was eventually delivered to
private respondent, albeit belatedly, We are persuaded that the employees of CATHAY acted in bad faith. . . .

". . . if the defendant airline is shown to have acted fraudulently or in bad faith, the award of moral and exemplary damages is proper."
virtua 1aw lib rary
cralaw

It must, of course, be borne in mind that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for
the injuries he may have suffered. 18 In a contractual or quasi-contractual relationship, exemplary damages, on the other hand, may
be awarded only if the defendant had acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 19 Attorneys fees in
the concept of damages may be awarded where there is a finding of bad faith. 20 The evidence on record amply sustains, and we
correspondingly find, that the awards assessed against petitioner on the aforestated items of damages are justified and reasonable.

At this juncture; it may also be pointed out that it is PALs duty to provide assistance to private respondents and, for that matter, any
other passenger similarly inconvenienced due to delay in the completion of the transport and the receipt of their baggage. Therefore,
its unilateral and voluntary act of providing cash assistance is deemed part of its obligation as an air carrier, and is hardly anything to
rave about. Likewise, arrangements for and verification of requested hotel accommodations for private respondents could and should
have been done by PAL employees themselves, and not by Dr. Miranda. It was rather patronizing of PAL to make much of the fact that
they allowed Dr. Miranda to use its office telephone in order to get a hotel room.

While it may be true that there was no direct evidence on record of blatant rudeness on the part of PAL employees towards the Mirandas,
the fact that private respondents were practically compelled to haggle for accommodations, a situation unbefitting persons of their
stature, is rather demeaning and it partakes of discourtesy magnified by PALs condescending attitude. Moreover, it cannot be denied
that the PAL employees herein concerned were definitely less than candid, to put it mildly, when they withheld information from private
respondents that they could actually be accommodated in a hotel of their choice.

Indeed, the flamboyant testimony of Oscar Jereza, * as PALs duty manager, merely pays lip-service to, without putting into reality, the
avowed company policy of invariably making available and always granting the requests for the kind and standard of accommodations
demanded by and appropriate for its passengers. 21 Certainly, a more efficient service, and not a lackadaisical and disorganized system,
is expected of the nationss flag carrier, especially on an international flight.

For, on the picayune matter of transportation expenses, PAL was obviously and unduly scrimping even on the small amount to be given
to the Mirandas. PAL failed to consider that they were making arrangements for two paying round-trip passengers, not penny-ante
freeloaders, who had been inconvenienced by the numerous delays in flight services and careless handling of their belongings by PAL.
The niggardly attitude of its personnel in this unfortunate incident, as well as their hair-splitting attempts at justification, is a disservice
to the image which our national airline seeks to project in its costly advertisements.

We agree with the findings of the lower court that the request of private respondents for monetary assistance of P300.00 for taxi fare
was indeed justified, considering that there were two of them and they had several pieces of luggage which had to be ferried between
the airport and the hotel. Also, the request for a small additional sum for tips is equally reasonable since tipping, especially in a first-rate
hotel, is an accepted practice, of which the Court can take judicial notice. This is aside from the fact that private respondents, having
just arrived from an extended trip abroad, had already run out of Philippine currency, which predicament was exacerbated by their
additional stay in Manila due to the off-loading of their baggage. All these inconveniences should have. warranted a commonsensical
and more understanding treatment from PAL, considering that private respondents found themselves in this unpleasant situation
through no fault of theirs.

2. On its second issue, petitioner avers that the express provisions on private respondents tickets stipulating that liability for delay in
delivery of baggage shall be limited to US$20.00 per kilo of baggage delayed, unless the passenger declares a higher valuation.
constitutes the contract of carriage between PAL and private respondents .

It further contends that these express provisions are in compliance with the provisions of the Warsaw Convention for the Unification of
Rules Relating to International Carrier by Air, to which the Philippines is a signatory. Thereunder, it is asserted that PAL flight PR 101
from San Francisco, U.S.A. to Manila, Philippines is an "international transportation" well within the coverage of the Warsaw Convention.

Petitioner obstinately insists on the applicability of the provisions of the Warsaw Convention regarding the carriers limited liability since
the off-loading was supposedly justified and not attended by bad faith. Neither was there any claim for loss of baggage as in fact private
respondents baggage were, albeit delayed, received by them in good condition. 22

The court a quo debunked petitioner s arguments by this holding: jgc:chanrob les.c om.ph

"The defense raised by defendant airlines that it can be held liable only under the terms of the Warsaw Convention (Answer, Special and
Affirmative Defenses, dated October 26, 1988) is of no moment. For it has also been held that Articles 17, 18 and 19 of the Warsaw
Convention of 1929 merely declare the air carriers liable for damages in the cases enumerated therein, if the conditions specified are
present. Neither the provisions of said articles nor others regulate or exclude liability for other breaches of contract by air carriers
(Northwest Airlines, Inc. v. Nicolas Cuenca, Et Al., 14 SCRA 1 063)." 23

This ruling of the trial court was affirmed by respondent Court of Appeals, thus: jgc:chanrob les.co m.ph

"We are not persuaded. Appellees do not seek payment for loss of any baggage. They are claiming damages arising from the
discriminatory off-loading of their baggag(e). That cannot be limited by the printed conditions in the tickets and baggage checks.
Neither can the Warsaw Convention exclude nor regulate the liability for other breaches of contract by air carriers. A recognition of the
Warsaw Convention does not preclude the operation of our Civil Code and related laws in determining the extent of liability of common
carriers in breach of contract of carriage, particularly for willful misconduct of their employees." 24

The congruent finding of both the trial court and respondent court that there was discriminatory off-loading being a factual question is,
as stated earlier, binding upon and can no longer be passed upon by this Court, especially in view of and in deference to the affirmance
of the same by respondent appellate court.

There was no error on the part of the Court of Appeals when it refused to apply the provisions of the Warsaw Convention, for in the words
of this Court in the aforequoted Cathay Pacific case: jgc:chanro bles. com.ph

". . . although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the
Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for
breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable in
the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and
pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers
under the contract of carriage, especially if willful misconduct on the part of the carriers employees is found or established, which is the
case before Us. . ."cralaw virtua 1aw lib rary

ACCORDINGLY, finding no reversible error, the challenged judgment of respondent Court of Appeals is hereby AFFIRMED in toto.
SO ORDERED.

Romero, Puno, Mendoza and Torres, Jr., JJ., concur

25. (Philippine Airlines, Inc. vs. Court of Appeals, G.R. No. 120262, July 17, 1997)
26. (Carlos Singson vs. Court of Appeals, G.R. No. 119995, November 18, 1997)
27. (Cathay Pacific Airways, Ltd., vs. Spouses Daniel Vazquez And Maria Luisa Madrigal Vazquez, G.R. No. 150843,
March 14, 2003)
28. (Philippine Airlines Inc. vs. Court of Appeals, G.R. No. 123238, September 22, 2008)
29. The Heirs of the late Ruben Reinoso, Sr. vs. Court of Appeals, GR No. 116121, July 18, 2011
30. Heirs of Josemaria Ochoa vs. G&S Transport Corporation, March 19, as affirmed in the July 16, 2012 decision

3.2 VIGILANCE OVER GOODS


1. Exempting Causes
1.1 Requirement of Absence of Negligence
Cases:
31. (Saturnino Bayasen vs. Court of Appeals, G.R. No.L-25785, 26 February 1981)
32. (Alberta Yobido vs. Court of Appeals, G.R. No. 113003, 17 October 1997)
33. (Bachelor Express, Incorporated vs. The Honorable Court of Appeals (Sixth Division), G.R. No. 85691, 31 July
1990)
34. (Sweet Lines, Inc. vs. The Honorable Court of Appeals, Micaela b. Quintos, et al., G.R. No. L-43640, 28 April 1983
35. (Vicente Vergara vs. The Court of Appeals, G.R. No. 77679, 30 September 1987)
36. (Mauro Ganzon vs. Court of Appeals, G.R. no. L-48757, 30 May 1988)
37. (Fortune Express, Inc. vs. Court of Appeals, G.R. No. 119756, 18 March 1999)
38. (Pedro Vasquez, et al., vs. The Court of Appeals, G.R. No. L-42926, 13 September 1985)
39. (Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621, 28 September 1999)
40. (Smith Bell Dodwell Shipping Agency Corporation vs. Catalino Borja, G.R. No. 143008. June 10, 2002)

3.3 LIABILITY OF SHIP OWNERS AND SHIPPING AGENTS


Cases:
41. (Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation Ltd., 217 SCRA 359, 1993)
42. (Luzon Stevedoring Corporation vs. Court of Appeals, G.R. No. L-58897, 3 December 1987)
43. (Chua Yek Hong vs. Intermediate Appellate Court, G.R. No. 74811, 30 September 1988)
44. Dela Torre vs. Court of Appeals, GR No. 160088, July 13, 2011
Also read
3.4 Extra ordinary diligence in Carriage by Sea
Seaworthiness
A. SEAWORTHINESS

a. Warranty of Seaworthiness of Ship


- This is the first step that should be undertaken
- Extraordinary diligence requires that the ship which will transport the passengers and goods is seaworthy.
- Seaworthiness of the vessel is impliedly warranted.
- The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy.

b. No duty to inquire
- Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the
vessels seaworthiness, genuineness of its licenses and compliance with all maritime laws. Passengers cannot be expected to inquire everytime they
board a common carrier, whether the carrier possesses the necessary papers or that all the carriers employees are qualified.
- It is the carrier that carries such burden of proving that the ship is seaworthy.
- Sufficient evidence must be submitted and the presentation of certificates of seaworthiness is not sufficient to overcome the presumption of
negligence.

c. Meaning of Seaworthiness
- A vessel must have such degree of fitness which an owner who is exercising extraordinary diligence would require his vessel to have at the
commencement of the voyage, having regard to all the probable circumstances of it. This includes fitness of the vessel itself to withstand the rigors
of voyage, fitness of the vessel to store the cargoes and accommodate passengers to be transported and that it is adequately equipped and properly
manned.
- Seaworthiness is that strength, durability and engineering skill made a part of a ships construction and continued maintenance, together with a
competent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonably be expected or
encountered during her voyage without loss or damage to her particular cargo
Example: The carrier was able to establish that the ship itself was seaworthy because the records reveal that the vessel was dry-docked and inspected by the Phil.
Coast Guard before its first destination.

A warranty of seaworthiness requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and
the requisite appurtenances and equipment.
The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation.

The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.

Note: Seaworthiness is relative it its construction and its application depends on the facts of a particular case (ex. Length and nature of the voyage)

Fitness of the Vessel Itself


- It is necessary that the vessel can be expected to meet the normal hazards of the journey
- General Test of Seaworthiness: Whether the ship and its appurtenances are reasonably fit to perform the service undertaken.

The ship must be cargoworthy


- Even if the vessel was properly maintained and is free from defect, the carrier must not accept the goods that cannot properly be transported in the ship
- The ship must be efficiently strong and equipped to carry the particular kind of cargo which she has contracted to carry and her cargo must be so loaded that it
is safe for her to proceed on her voyage.

The vessel must be adequately equipped and properly manned.


- On top of regular maintenance and inspection, Captains, masters or patrons of vessels must prove the skill, capacity, and qualifications necessary to command
and direct the vessel.
- If the owner of a vessel desires to be the captain without having the legal qualifications, he shall limit himself to the financial administration of the vessel and
shall entrust the navigation to a qualified person.

Note: It is not an excuse that the carrier cannot afford the salaries of competent and licensed crew or that latter is unavailable.

Adequate Equipment
- With respect to vessels that carries passengers, the Maritime Industry Authority prescribes rules which provide for indispensable equipment and facilities
- ex. Exit doors, life boats, live vests

Deviation

1. Deviation

- If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made (subject to the approval by the
Maritime Industry Authority), the carrier may not change the route, unless it be by reason of force majeure. Without this cause, he shall be liable for all
the losses which the goods may suffer, aside from paying the sum stipulated for that case.

- When on account of the force majeure, the carrier had to take another route which resulted to an increase in transportation charges, he shall be
reimbursed upon formal proof.

Note: With respect to carriers by sea, the routes are subject to approval by MARINA and the same cannot generally be changed without the authorization from said
administrative agency

Negligence of Captain and Crew

- Failure on the part of the carrier to provide competent captain and crew should be distinguished from the negligence of the said captain and crew, because
the latter is covered by the Limited Liability Rule (liability of the shipowner may be limited to the value of the vessel).

- If the negligence of the captain and crew can be traced to the fact that they are really incompetent, the Limited Liability Rule cannot be invoked because
the shipowner may be deemed negligent.

Rules on passengers safety

- Negligence on the part of the captain and crew as well as the operator includes failure to comply with the regulation issued by the Maritime Industry Authority
(MARINA) on the safety of the passengers

- Memorandum Circular No. 112 : passengers do not merely contract for transportation because they have the right to be treated by the carrier and its
employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal conduct, injurious language,
indignities and abuses from the said carrier and its employees
- Read Memorandum Circular No. 114: p. 204

Transshipment

- The act of taking cargo out of one ship and loading it into another; to transfer goods from the vessel stipulated in the contract of affreightment to another
vessel before the place of destination named in the contract has been reached.

- Transshipment of freight without legal excuse is a violation of the contract and subjects the carrier to liability if the freight is lost even by a cause
otherwise excepted.

Note: there is transshipment whether or not the same person, firm or entity owns the vessels (what matters is the actual physical transfer of cargo from one vessel
to another)

ADDITIONAL READINGS FOR THE LAW ON TRANSPORTATION

A. VALIDITY OF STIPULATIONS:

1. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., et al January 12, 2015.

2. Provident Insurance Corp. v. CA et al., G.R. No. 118030 January 15, 2004

3. Ysmael v. Barretto 51 Phil 90 G.R. No. L-28028 November 25, 1927

Facts:
Plaintiff seeks to recover from defendant the alleged value of the four cases of merchandise which it
delivered to the steamship ANDRES on October 23, 1922, at Manila, to be shipped to Surogao. Said shipment
was never delivered to the consignee. The defendants rely only on clause 7 of the bill of lading whereby it was
provided that action not brought within 610 days from the time the cause of action accrued still be barred, and
on clause 12 which provided that the defendants are not liable for any package in excess of P300 unless the
value and contracts of such package are correctly stated in the bill of lading at the time of the shipment. The
goods in question were shipped from Manila on October 25, 1922, or a little less that 6 months after the
shipment was made.

Issue:
Whether or not the action was brought within a reasonable time.

Held:
The action was brought within a reasonable time as those words are specified and defined in the
authorities sited. It is true that both the plaintiff and the defendants are residents of the City of Manila, but it is
also true that Surigao where the goods in question were to be delivered is one of the most distant places from
Manila in the Philippine Islands. In the very nature of things, plaintiff would not want to commence its action
until such time as it had made a full and careful investigation of all of the material facts and even the law of the
case, so as to determine whether or not defendants were liable for its loss.
Clause 12 places a limit of P300 for any single package of silk. The evidence of each case very near
P2,500. In this situation, the limit of defendants liability for each package of silk for loss or damage from any
cause of for any reason, would put it in the power of the defendant to have taken the whole cargo of 64 cases of
silk at a valuation of P300 of each case, or less than 1/8 of its actual value. If that rule of law should be
sustained, no silk would ever be shipped from one island to another in the Philippines. Such a limitation in
value is valid as against public policy.
4. Sweet Lines Inc., v. Teves G.R. No. L-37750 May 19, 1978

Sweet Lines Inc. v. Teves


G.R. No. L-37750
Facts:
Private respondents Atty. Leovigildo Tandog and Rogelio Tirog bought tickets at the branch office of the
petitioner, a shipping company transporting inter-island passengers and cargoes, at the Cagayan de Oro City.
Respondents were to board M/S Sweet Hope,however upon learning that it will not be proceeding to Bohol
they decided to board M/S Sweet Town. On such vessel the respondents agreed to hide at the cargo section
to avoid inspection of the officers of the Philippine Coast guard.
After suffering the inconviences in the cargo section and paying other tickets because those that are in
their possession were no honored. The respondents sued the petitioners in the Court of First Instance of
Misamis Oriental for breach of contract of carriage in the alleged sum of P110,000.00.
Petitioners moved for the dismissal of the complaint on the ground of improper venue for Conditon No.
14 printed on the ticket essentially provides that any actions arising out of the ticket will be filed at the
competent court of Cebu.
The trial court ruled in favor of the respondents after denying the motion for dismissal. Having
exhausted all the remedies available and still failed to obtain a ruling in their favor, the petitioner filed this
instant petition for prohibition with preliminary injunction.
The Supreme Court gave due course to their petition and required them to submit their memoranda in
support of their respective contention.
Respondents contend that condition No. 14 is not a part of the contract of carriage and that it is an
independent contract requiring the mutual consent of the parties. In the case at bar the consent of the
respondents was not sought it was imposed on them unilaterally. Venue of actions can only be waived if there
is a written agreement of the parties. Condition No.14 not being agreed to by the respondents is not valid and
enforceable. Supposing that it is otherwise, it is not exclusive and does not, therefore exclude the filing of the
action in Misamis Oriental.
Petioner contend that condition No. 14 is valid and enforceable because private respondents acceded
to it when they purchased passage tickets and it is an effective waiver of venue, valid and binding as such,
since it is printed in bold and capital letters and not in fine print and merely assigns the place where the action
arising from the contract is instituted. That condition No. 14 is unequivocal and mandatory, the words and
phrases any and all, irrespective of where it is issued, and shall leave no doubt that the intention of
Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of all other places.

Issue:
Whether or not condition No. 14 is valid and enforceable.

Held:
Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue
may be changed or transferred from one province to another by agreement of the parties in writing pursuant to
Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates
the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions
on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the
ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition
will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices
in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of
the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvience to, much
less prejudice, petitioner.
Public policy is . . . that principle of the law which holds that no subject or citizen can lawfully do that which has
a tendency to be injurious to the public or against the public good . . .. Under this principle . . . freedom of
contract or private dealing is restricted by law for the good of the public. Clearly, Condition No. 14, if enforced,
will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger
claimants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons,
who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and
unenforceable, as contrary to public policy to make the courts accessible to all who may have need of their
services.
B. PAROL EVIDENCE RULE

1. Saludo v. CA G.R. No. 95536 March 23, 1992

Facts:
Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of plaintiffs
mother to Continental Mortuary Air Services which booked the shipment of the remains from Chicago to San
Francisco by Trans World Airways (TWA) and from San Francisco to Mania with Philippine Airlines (PAL). The
remains were taken to the Chicago Airport, but it turned out that there were 2 bodies in the said airport.
Somehow the 2 bodies were switched, and the remains of plaintiffs mother was shipped to Mexico instead.
The shipment was immediately loaded on another PAL flight and it arrived the day after the expected arrival.
Plaintiff filed a claim for damages in court. The lower court absolved both airlines and upon appeal it was
affirmed by the court.

Issue:
Whether or not the 2 airlines should be held liable for damages.

Held:
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and
effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the
right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the
goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when
the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier
for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has
thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we
agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier
instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact
have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been
unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the
carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under
Article 1735 be invoked.
As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the
cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as
agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that
date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway
Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them,
and subsequent events caused thereby, private respondents cannot be held liable

C. ACTIONS AND DAMAGES:

1. Sulpicio Lines, Inc. v. Sesante, et al., G.R. No. 172682, July 27, 2016

2. Cathay Pacific Airways, Ltd. V. Sps. Fuentebella, G.R. No. 188283 July 20, 2016
3. Northwest Airlines, Inc. V. Steven P. Chiong January 31, 2008

4. Cathay Pacific Airways v. Reyes June 26, 2013


5. Bernales v. Northwest Airlines October 5, 2015

6. Seven Brothers Shipping Corp. V. DMC Construction Resources Inc., G.R. No. 193914 November 26, 2014

Part 4 Bill of Lading and Other Formalities


4.1 Concepts
4.2 Definition
4.3 Kind of Bill of lading
4.4 Nature of Bill of lading
4.5 When effective
4.6 Bill of lading as Contract
Parties
Contract of adhesion
Parol evidence rule
Bill of lading as evidence
Bill of lading as actionable document
Shipment terms

PART 5 ACTIONS AND DAMAGES IN CASE OF BREACH

5.1 Distinctions CULPA CONTRACTUAL V. CULPA AQUILIANA


5.2 Concurrent causes of actions
Concurrence with 3rd persons
Solidary liability
Alternative compensation scheme
5.3 Notice of claim and prescriptive period
Claim in overland Transportation and coastwise shipping
Prescription in Overland Transportation and coastwise shipping
Claim in International carriage of goods by sea
Prescription in International Carriage of goods
5.4 Recoverable Damages
Extent of recovery
Kinds of damages
Actual or Compensatory Damages
Attorneys fees
Interest
Moral damages
Nominal damages
Temperate or moderate damages
Liquidated damages
Exemplary or corrective damages
PART 6 MARITIME LAW
Maritime law defined
Real and Hypothecary Nature
Protest
Admiralty jurisdiction
Maritime pollution
Marine insurance

PART 7 VESSELS

PART 8 CHARTER PARTIES

Definition
Different kinds of charter parties
Bareboat charter
Contract of affreightment
Effect of charter on character of carrier
Persons who may make charter
Charterer
Part owners
Ship agents
Captain or master
Requisites of a valid charter party
Freight
Port of unloading
Demurrage

PART 9 LOANS ON BOTTOMRY AND RESPODENTIA


PART 10 AVERAGES
PART 11 COLLISSIONS
PART 12 ARRIVAL UNDER STRESS AND SHIPWRECKS
PART 13 SALVAGE
PART 14 - COGSA